Full Press Release Details
| NEWS RELEASE | |
| CONTACT : | |
| CONMED Corporation | |
| Todd Garner | |
| Chief Financial Officer | |
| 315-624-3317 | |
| ToddGarner@conmed.com |
CONMED Corporation Announces
First Quarter 2019 Financial Results
Utica, New York, April 24,
2019 --- CONMED Corporation (Nasdaq: CNMD) today announced financial results for the first quarter of 2019.
First Quarter 2019 Highlights
"We are pleased to report
continued strength and momentum in the business this quarter," commented Curt R. Hartman, CONMED's President and Chief
Executive Officer. "Our expanding new product pipeline, combined with our solid execution during the first quarter, positions
us well to deliver on our increased expectations for 2019."
The Company is increasing its full-year
2019 financial guidance. The Company now expects full-year 2019 reported sales growth in the range of 9% to 10%, which includes
an increase to its organic constant currency sales growth to a range of 5.25% to 6.25% from the original range of 5% to 6%, as
well as the addition of the Buffalo Filter acquisition. Based on recent exchange rates, the negative impact to 2019 sales from
foreign exchange is now expected to be approximately 75 basis points, a reduction from the original estimate of 100 basis points.
The Company is also increasing its
guidance for adjusted diluted net earnings per share to the range of $2.47 to $2.52 from the original range of $2.42 to $2.47.
This represents growth over 2018 of approximately 13% to 16%. The adjusted diluted net earnings per share estimates for 2019 exclude
amortization of intangible assets, amortization of deferred financing fees and debt discount, which are estimated in the range
of $34 to $36 million, net of tax. Also excluded are the costs of special items, including acquisition costs, restructuring costs
and debt refinancing costs, which are estimated in the range of $16 to $18 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.
The Company's management will
host a conference call today at 4:30 p.m. ET to discuss its first quarter 2019 results.
To participate in the conference
call, dial 844-889-7792 (domestic) or 661-378-9936 (international) and refer to the passcode
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 7:30 p.m. ET on Wednesday, April 24, 2019, until 7:30 p.m. ET on Thursday, May 9, 2019. To hear this recording,
dial 855-859-2056 (domestic) or 404-537-3406 (international) and enter the passcode 9275258.
Consolidated Condensed Statements of Income
(in thousands, except per share amounts,
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2019 | 2018 | |||||||
| Net sales | $ | 218,378 | $ | 202,064 | ||||
| Cost of sales | 96,940 | 92,507 | ||||||
| Gross profit | 121,438 | 109,557 | ||||||
| % of sales | 55.6% | 54.2% | ||||||
| Selling and administrative expense | 99,226 | 84,568 | ||||||
| Research & development expense | 10,575 | 7,711 | ||||||
| Income from operations | 11,637 | 17,278 | ||||||
| % of sales | 5.3% | 8.6% | ||||||
| Interest expense | 9,369 | 4,818 | ||||||
| Other expense | 4,225 | - | ||||||
| Income (loss) before income taxes | (1,957 | ) | 12,460 | |||||
| Provision (benefit) for income taxes | (2,978 | ) | 1,803 | |||||
| Net income | $ | 1,021 | $ | 10,657 | ||||
| Basic EPS | $ | 0.04 | $ | 0.38 | ||||
| Diluted EPS | 0.04 | 0.37 | ||||||
| Basic shares | 28,173 | 28,008 | ||||||
| Diluted shares | 29,034 | 28,573 |
(in millions, unaudited)
| Three Months Ended March 31, | ||||||||||||||||||||||||||||||||||||
| % Change | ||||||||||||||||||||||||||||||||||||
| Domestic | International | |||||||||||||||||||||||||||||||||||
| 2019 | 2018 | As Reported | Impact of Foreign Currency | Constant Currency | As Reported | As Reported | Impact of Foreign Currency | Constant Currency | ||||||||||||||||||||||||||||
| Orthopedic Surgery | $ | 113.4 | $ | 108.9 | 4.2% | 1.5% | 5.7% | 4.9% | 3.8% | 2.4% | 6.2% | |||||||||||||||||||||||||
| General Surgery | 105.0 | 93.2 | 12.6% | 0.8% | 13.4% | 13.7% | 10.2% | 2.6% | 12.8% | |||||||||||||||||||||||||||
| $ | 218.4 | $ | 202.1 | 8.1% | 1.2% | 9.3% | 10.1% | 5.8% | 2.5% | 8.3% | ||||||||||||||||||||||||||
| Single-use Products | $ | 172.4 | $ | 161.7 | 6.6% | 1.2% | 7.8% | 11.3% | 1.3% | 2.5% | 3.8% | |||||||||||||||||||||||||
| Capital Products | 46.0 | 40.4 | 13.9% | 1.4% | 15.3% | 5.3% | 22.6% | 2.8% | 25.4% | |||||||||||||||||||||||||||
| $ | 218.4 | $ | 202.1 | 8.1% | 1.2% | 9.3% | 10.1% | 5.8% | 2.5% | 8.3% | ||||||||||||||||||||||||||
| Domestic | $ | 117.0 | $ | 106.3 | 10.1% | 0.0% | 10.1% | |||||||||||||||||||||||||||||
| International | 101.4 | 95.8 | 5.8% | 2.5% | 8.3% | |||||||||||||||||||||||||||||||
| $ | 218.4 | $ | 202.1 | 8.1% | 1.2% | 9.3% |
Reconciliation of Reported Net Income to
(in thousands, except per share amounts, unaudited)
| Three Months Ended March 31, 2019 | ||||||||||||||||||||||||||||||||||||
| Gross Profit | Selling & Administrative Expense | Operating Income | Interest Expense | Other Expense | Tax Expense/ (Benefit) | Effective Tax Rate | Net Income | Diluted EPS | ||||||||||||||||||||||||||||
| As reported | $ | 121,438 | $ | 99,226 | $ | 11,637 | $ | 9,369 | $ | 4,225 | $ | (2,978 | ) | 152.2% | $ | 1,021 | $ | 0.04 | ||||||||||||||||||
| % of sales | 55.6% | 45.4% | 5.3% | |||||||||||||||||||||||||||||||||
| Business acquisition costs (1) | 660 | (7,245 | ) | 7,905 | - | - | 2,327 | 5,578 | 0.19 | |||||||||||||||||||||||||||
| Debt refinancing costs (2) | - | - | - | - | (3,904 | ) | 1,149 | 2,755 | 0.09 | |||||||||||||||||||||||||||
| $ | 122,098 | $ | 91,981 | $ | 19,542 | $ | 9,369 | $ | 321 | $ | 498 | $ | 9,354 | $ | 0.32 | |||||||||||||||||||||
| Gross profit % | 55.9% | |||||||||||||||||||||||||||||||||||
| Amortization (3) | $ | 1,500 | (5,829 | ) | 7,329 | (2,207 | ) | - | 2,408 | 7,128 | 0.25 | |||||||||||||||||||||||||
| Adjusted net income | $ | 86,152 | $ | 26,871 | $ | 7,162 | $ | 321 | $ | 2,906 | 15.0% | $ | 16,482 | $ | 0.57 | |||||||||||||||||||||
| % of sales | 39.5% | 12.3% |
| Three Months Ended March 31, 2018 | ||||||||||||||||||||||||||||||||||||
| Gross Profit | Selling & Administrative Expense | Operating Income | Interest Expense | Other Expense | Tax Expense/ (Benefit) | Effective Tax Rate | Net Income | Diluted EPS | ||||||||||||||||||||||||||||
| As reported | $ | 109,557 | $ | 84,568 | $ | 17,278 | $ | 4,818 | $ | - | $ | 1,803 | 14.5% | $ | 10,657 | $ | 0.37 | |||||||||||||||||||
| % of sales | 54.2% | 41.9% | 8.6% | |||||||||||||||||||||||||||||||||
| Tax reform (4) | - | - | - | - | - | (301 | ) | 301 | 0.01 | |||||||||||||||||||||||||||
| $ | 109,557 | $ | 84,568 | $ | 17,278 | $ | 4,818 | $ | - | $ | 1,502 | $ | 10,958 | $ | 0.38 | |||||||||||||||||||||
| Adjusted gross profit % | 54.2% | |||||||||||||||||||||||||||||||||||
| Amortization (3) | $ | 1,500 | (4,021 | ) | 5,521 | - | - | 1,353 | 4,168 | 0.15 | ||||||||||||||||||||||||||
| Adjusted net income | $ | 80,547 | $ | 22,799 | $ | 4,818 | $ | - | $ | 2,855 | 15.9% | $ | 15,126 | $ | 0.53 | |||||||||||||||||||||
| % of sales | 39.9% | 11.3% |
(1) In 2019, the Company incurred investment banking fees, consulting
fees, legal fees and integration related costs associated with the acquisition of Buffalo Filter, LLC.
(2) In 2019, in conjunction with the acquisition of Buffalo Filter,
LLC, the Company refinanced its existing credit facility and incurred one-time fees associated with an agreement between the Company
and JP Morgan Chase Bank, N.A., as well as costs associated with the early extinguishment of debt.
(3) Includes amortization of intangible assets, deferred financing
fees and debt discount.
(4) In 2018, the Company recorded tax expense resulting from the
2017 Tax Cuts and Jobs Act. The 2018 amounts are adjustments to the initial December 2017 deferred tax balances.
Reconciliation of Reported Net Income to
EBITDA & Adjusted EBITDA
(in thousands, unaudited)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2019 | 2018 | |||||||
| Net income | $ | 1,021 | $ | 10,657 | ||||
| Provision (benefit) for income taxes | (2,978 | ) | 1,803 | |||||
| Interest expense | 9,369 | 4,818 | ||||||
| Depreciation | 4,442 | 4,502 | ||||||
| Amortization | 12,208 | 10,488 | ||||||
| EBITDA | $ | 24,062 | $ | 32,268 | ||||
| Stock based compensation | 2,703 | 2,303 | ||||||
| Business acquisition costs | 7,905 | - | ||||||
| Debt refinancing costs | 3,904 | - | ||||||
| Adjusted EBITDA | $ | 38,574 | $ | 34,571 | ||||
| EBITDA Margin | ||||||||
| EBITDA | 11.0% | 16.0% | ||||||
| Adjusted EBITDA | 17.7% | 17.1% |
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, thoracic surgery,
and gastroenterology. For more information, visit www.conmed.com.
Forward-Looking Statements
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, 2018,
and listed under the heading Forward-Looking Statements in the Company's most recently filed Form 10-Q. 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
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 research and development
expense; adjusted operating income; adjusted interest expense; adjusted other expense; adjusted income tax expense; adjusted effective
income tax rate; adjusted net income 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 its financial results and assessing
its prospects for future performance. Management believes percentage sales growth in constant currency and the other adjusted measures
described above are important indicators of its operations because they exclude items that may not be indicative of, or are unrelated
to, its 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 its budget process and bases certain management incentive compensation on these non-GAAP financial
a constant currency basis is a non-GAAP measure. The Company analyzes net sales on a constant currency basis to better measure
the comparability of results between periods. 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 net 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 past and future performance
and are therefore excluded to allow investors to better understand underlying operating trends.
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, research and development
expense, operating income, interest expense, other expense, income tax expense (benefit), effective income tax rate, net income
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 the Company's operations that, when viewed with GAAP results and the reconciliations
to corresponding GAAP financial measures above, provide a more complete understanding of the business. The Company strongly encourages
investors and shareholders to review its financial statements and publicly-filed reports in their entirety and not to rely on any