Full Press Release Details
| NEWS RELEASE | |
| CONTACT : | |
| CONMED Corporation | |
| Luke Pomilio | |
| Chief Financial Officer | |
| 315-624-3202 | |
| LukePomilio@conmed.com |
CONMED Corporation Announces Second Quarter
2015 Financial Results
Utica, New York, July 21, 2015 --- CONMED
Corporation (Nasdaq: CNMD) today announced financial results for the second quarter ended June 30, 2015.
Second Quarter 2015 Highlights
"I am encouraged by the progress we have
made throughout our commercial organization, and we exited the second quarter with positive momentum across our business. We are
well positioned for accelerating growth in the second half and, importantly, remain on track to achieve our full year financial
guidance," commented Curt R. Hartman, CONMED's President and Chief Executive Officer.
For the quarter ended June 30, 2015, domestic
sales, which represented 49.2% of total revenue, increased 1.9%, driven by growth in capital equipment sales. International sales,
which represented 50.8% of total revenue, declined 8.7% compared to the second quarter of 2014 on a reported basis. Foreign currency
exchange rates, including the effects of the FX hedging program, had a negative impact of $6.4 million on second quarter sales.
In constant currency, international sales decreased 2.5% versus the prior-year period. Outside the United States, a slight increase
in the sales of single-use products was more than offset by a decline in capital equipment sales.
Reported net earnings of $7.5 million decreased
27.2% in the quarter, compared to reported net earnings of $10.3 million in the prior year. Reported diluted net earnings per share
of $0.27 decreased 27.0% in the quarter, compared to the prior year period. Reported net earnings include restructuring costs in
2015 and 2014, as well as charges for a patent dispute and shareholder activism in 2014. The effect of each of these items on reported
net earnings appears in the reconciliation of GAAP to non-GAAP measures provided below.
Excluding the impact of the items described
above, adjusted net earnings of $9.9 million decreased 23.5% year over year, and adjusted diluted net earnings per share of $0.36
decreased 23.4% year over year. Lower operating expenses in the current quarter were more than offset by the negative impact of
foreign currency, the expensing of unfavorable production variances incurred in prior periods and a higher tax rate.
The Company reiterated its previously disclosed
constant currency sales guidance, which calls for organic sales growth in 2015 to be in the range of 1% to 3%. Using current exchange
rates, CONMED continues to anticipate that reported sales for 2015 will be in the range of $723 million to $738 million, representing
a growth range of (2%) to 0%, and that adjusted diluted net earnings per share will be in the range of $1.82 to $1.92.
The Company's management will host a
conference call today at 4:30 p.m. ET to discuss its second quarter results.
To participate in the conference call, dial
877-280-4957 (domestic) or 857-244-7314 (international) and enter the passcode 95923964.
This conference call will also be webcast and
can be accessed from the Investors section of CONMED's web site 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 Tuesday, July 21, 2015, until 11:59 p.m. ET on Tuesday, July 28, 2015. To hear this recording, dial 888-286-8010
(domestic) or 617-801-6888 (international) and enter the passcode 99098236.
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 16
countries outside the United States, and international sales constitute over 50% of the Company's total sales. Headquartered
in Utica, New York, the Company employs 3,400 people. For more information, visit www.conmed.com.
Forward-Looking Statements
This press release contains forward-looking
statements based on certain assumptions and contingencies that involve risks and uncertainties. The 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 forward-looking statements in this press release 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. In addition to general industry and economic conditions, factors that could cause actual results to
differ materially from those discussed in the forward-looking statements in this press release include, but are not limited to,
the risks relating to forward-looking statements discussed in the Company's Annual Report on Form 10-K for the fiscal year ended
Supplemental Information - Reconciliation of GAAP to Non-GAAP
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 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 businesses. 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 operating trends.
Because non-GAAP financial measures are not
standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having
the same or similar names. These adjusted financial measures should not be considered in isolation or as a substitute for reported
sales growth, gross profit, cost of sales, selling and administrative expenses, operating income, effective income tax rate, net
earnings and diluted net earnings per share, the most directly comparable GAAP financial measures. These non-GAAP financial measures
are an additional way of viewing aspects of our operations that, when viewed with our GAAP results and the reconciliations to corresponding
GAAP financial measures below, provide a more complete understanding of our business. The Company strongly encourages investors
and shareholders to review our financial statements and publicly-filed reports in their entirety and not to rely on any single
Consolidated Condensed Statements of Income
(in thousands except per share amounts, unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Net sales | $ | 181,027 | $ | 188,150 | $ | 358,967 | $ | 370,091 | ||||||||
| Cost of sales | 87,529 | 87,122 | 173,187 | 166,481 | ||||||||||||
| Gross profit | 93,498 | 101,028 | 185,780 | 203,610 | ||||||||||||
| % of sales | 51.6% | 53.7% | 51.8% | 55.0% | ||||||||||||
| Selling and administrative expense | 73,581 | 78,234 | 148,367 | 156,598 | ||||||||||||
| R & D | 7,501 | 6,854 | 14,043 | 13,764 | ||||||||||||
| Income from operations | 12,416 | 15,940 | 23,370 | 33,248 | ||||||||||||
| % of sales | 6.9% | 8.5% | 6.5% | 9.0% | ||||||||||||
| Interest expense | 1,489 | 1,571 | 2,949 | 3,032 | ||||||||||||
| Income before income taxes | 10,927 | 14,369 | 20,421 | 30,216 | ||||||||||||
| Provision for income taxes | 3,466 | 4,114 | 6,648 | 11,335 | ||||||||||||
| Net income | $ | 7,461 | $ | 10,255 | $ | 13,773 | $ | 18,881 | ||||||||
| Basic EPS | $ | 0.27 | $ | 0.38 | $ | 0.50 | $ | 0.69 | ||||||||
| Diluted EPS | $ | 0.27 | $ | 0.37 | $ | 0.49 | $ | 0.68 | ||||||||
| Basic shares | 27,620 | 27,257 | 27,603 | 27,303 | ||||||||||||
| Diluted shares | 27,857 | 27,753 | 27,839 | 27,803 |
Consolidated Condensed Balance Sheets
(in thousands, unaudited)
| June | December | |||||||
| 2015 | 2014 | |||||||
| Assets: | ||||||||
| Cash and cash equivalents | $ | 62,216 | $ | 66,332 | ||||
| Accounts receivable, net | 129,660 | 129,287 | ||||||
| Inventories | 149,180 | 148,149 | ||||||
| Other current assets | 33,210 | 37,382 | ||||||
| Total Current Assets | 374,266 | 381,150 | ||||||
| Property, plant and equipment, net | 131,625 | 133,429 | ||||||
| Goodwill | 261,004 | 256,232 | ||||||
| Other intangible assets, net | 311,128 | 316,440 | ||||||
| Other assets | 11,363 | 10,943 | ||||||
| Total Assets | $ | 1,089,386 | $ | 1,098,194 | ||||
| Liabilities and Shareholders' Equity | ||||||||
| Current liabilities | $ | 109,882 | $ | 115,956 | ||||
| Long-term debt, excluding current maturities | 258,545 | 240,201 | ||||||
| Other liabilities | 142,865 | 160,739 | ||||||
| Shareholders' equity | 578,094 | 581,298 | ||||||
| Total liabilities and shareholders' equity | $ | 1,089,386 | $ | 1,098,194 |
Consolidated Condensed Statements of Cash
Six Months Ended June 2015 and 2014
(in thousands, unaudited)
| 2015 | 2014 | |||||||
| Operating Activities | ||||||||
| Net income | $ | 13,773 | $ | 18,881 | ||||
| Depreciation and amortization | 21,081 | 22,304 | ||||||
| Changes in operating assets and liabilities and other, net | (9,799 | ) | (16,272 | ) | ||||
| Net cash provided by operating activities | 25,055 | 24,913 | ||||||
| Investing Activities | ||||||||
| Payments related to business acquisitions | (6,104 | ) | - | |||||
| Purchases of property, plant, and equipment | (7,783 | ) | (8,641 | ) | ||||
| Net cash used in investing activities | (13,887 | ) | (8,641 | ) | ||||
| Financing Activities | ||||||||
| Proceeds of debt | 19,000 | 31,000 | ||||||
| Payment related to distribution agreements | (16,667 | ) | (16,667 | ) | ||||
| Payment related to contingent consideration | (2,423 | ) | - | |||||
| Dividend payments on Common Stock | (11,026 | ) | (10,987 | ) | ||||
| Repurchase of Common Stock | - | (16,862 | ) | |||||
| Other, net | 51 | 2,252 | ||||||
| Net cash used in financing activities | (11,065 | ) | (11,264 | ) | ||||
| Effect of exchange rate change on cash and cash equivalents | (4,219 | ) | 963 | |||||
| Net increase (decrease) in cash and cash equivalents | (4,116 | ) | 5,971 | |||||
| Cash and cash equivalents at beginning of period | 66,332 | 54,443 | ||||||
| Cash and cash equivalents at end of period | $ | 62,216 | $ | 60,414 |
(in millions, unaudited)
| Three Months Ended June | Six Months Ended June | |||||||||||||||||||||||||||||||
| % Change | % Change | |||||||||||||||||||||||||||||||
| 2015 | 2014 | As Reported | Constant Currency | 2015 | 2014 | As Reported | Constant Currency | |||||||||||||||||||||||||
| Orthopedic Surgery | $ | 96.8 | $ | 102.4 | -5.4% | -1.0% | $ | 195.4 | $ | 208.3 | -6.2% | -2.1% | ||||||||||||||||||||
| General Surgery | 71.1 | 70.7 | 0.5% | 2.3% | 137.2 | 134.2 | 2.2% | 3.9% | ||||||||||||||||||||||||
| Surgical Visualization | 13.1 | 15.1 | -12.8% | -9.4% | 26.4 | 27.6 | -4.3% | -1.0% | ||||||||||||||||||||||||
| $ | 181.0 | $ | 188.2 | -3.8% | -0.4% | $ | 359.0 | $ | 370.1 | -3.0% | 0.2% | |||||||||||||||||||||
| Single-use products | $ | 145.3 | $ | 150.2 | -3.2% | 0.2% | $ | 285.5 | $ | 296.6 | -3.7% | -0.6% | ||||||||||||||||||||
| Capital products | 35.7 | 38.0 | -6.1% | -2.8% | 73.5 | 73.5 | 0.0% | 3.2% | ||||||||||||||||||||||||
| $ | 181.0 | $ | 188.2 | -3.8% | -0.4% | $ | 359.0 | $ | 370.1 | -3.0% | 0.2% |
Reconciliation of Reported Net Earnings to
Adjusted Net Earnings
(in thousands, except per
share amounts, unaudited)
| Three Months Ended June 2015 | ||||||||||||||||||||||||
| Gross Profit | Selling & Administrative Expense | Operating Income | Net Income | Effective Tax Rate | Diluted EPS | |||||||||||||||||||
| As reported | $ | 93,498 | $ | 73,581 | $ | 12,416 | $ | 7,461 | 31.7% | $ | 0.27 | |||||||||||||
| % of sales | 51.6% | 6.9% | ||||||||||||||||||||||
| Restructuring costs (1) | 1,534 | (2,284 | ) | 3,818 | 2,444 | 1.1% | 0.09 | |||||||||||||||||
| Adjusted | $ | 95,032 | $ | 71,297 | $ | 16,234 | $ | 9,905 | 32.8% | $ | 0.36 | |||||||||||||
| % of sales | 52.5% | 9.0% |
| Three Months Ended June 2014 | ||||||||||||||||||||||||
| Gross Profit | Selling & Administrative Expense | Operating Income | Net Income | Effective Tax Rate | Diluted EPS | |||||||||||||||||||
| As reported | $ | 101,028 | $ | 78,234 | $ | 15,940 | $ | 10,255 | 28.6% | $ | 0.37 | |||||||||||||
| % of sales | 53.7% | 8.5% | ||||||||||||||||||||||
| Restructuring costs (1) | 1,358 | (494 | ) | 1,852 | 1,185 | 0.8% | 0.05 | |||||||||||||||||
| Patent dispute and other matters (2) | - | (1,410 | ) | 1,410 | 902 | 0.5% | 0.03 | |||||||||||||||||
| Shareholder activism (3) | - | (935 | ) | 935 | 598 | 0.3% | 0.02 | |||||||||||||||||
| Adjusted | $ | 102,386 | $ | 75,395 | $ | 20,137 | $ | 12,940 | 30.3% | $ | 0.47 | |||||||||||||
| % of sales | 54.4% | 10.7% |
| Six Months Ended June 2015 | ||||||||||||||||||||||||
| Gross Profit | Selling & Administrative Expense | Operating Income | Net Income | Effective Tax Rate | Diluted EPS | |||||||||||||||||||
| As reported | $ | 185,780 | $ | 148,367 | $ | 23,370 | $ | 13,773 | 32.6% | $ | 0.49 | |||||||||||||
| % of sales | 51.8% | 6.5% | ||||||||||||||||||||||
| Restructuring costs (1) | 3,863 | (8,464 | ) | 12,327 | 7,889 | 1.3% | 0.29 | |||||||||||||||||
| Adjusted | $ | 189,643 | $ | 139,903 | $ | 35,697 | $ | 21,662 | 33.9% | $ | 0.78 | |||||||||||||
| % of sales | 52.8% | 9.9% |