Full Press Release Details
| NEWS RELEASE | |
| CONTACT : | |
| CONMED Corporation | |
| Todd Garner | |
| Chief Financial Officer | |
| 315-624-3317 | |
| ToddGarner@conmed.com |
CONMED Corporation Announces Second Quarter
2019 Financial Results
Utica, New York, July 31, 2019 --- CONMED
Corporation (Nasdaq: CNMD) today announced financial results for the second quarter of 2019.
Second Quarter 2019 Highlights
"We are very pleased with our second
quarter and first-half results", commented Curt R. Hartman, CONMED's President and Chief Executive Officer. "The
entire business continued to strengthen, and we made exceptional progress integrating the Buffalo Filter acquisition while continuing
to introduce new products, such as our Infinity Knee system, into the market. The underlying strength in the business and our improving
position in the growth markets we serve give us the confidence to increase our full-year expectations for both revenue and earnings."
The Company is increasing its full-year 2019
financial guidance. The Company now expects full-year 2019 reported sales in the range of approximately $951 million to $958 million
which includes an increase to its outlook for organic constant currency sales growth to a range of 6.0% to 6.5% from the previous
range of 5.25% to 6.25%. Based on recent exchange rates, the negative impact to 2019 sales from foreign exchange is now expected
to be approximately 50 basis points, a reduction from the previous estimate of 75 basis points.
The Company is also increasing its guidance
for adjusted diluted net earnings per share to the range of $2.52 to $2.57 from the previous range of $2.47 to $2.52. This represents
growth over 2018 of approximately 16% to 18%. 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 $33 to $35
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 second quarter 2019 results.
To participate in the conference call, dial
844-889-7792 (domestic) or 661-378-9936 (international) and refer to the passcode 6992059.
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, July 31, 2019, until 7:30 p.m. ET on Thursday, August 15, 2019. To hear this recording, dial 855-859-2056
(domestic) or 404-537-3406 (international) and enter the passcode 6992059.
Consolidated Condensed Statements of
(in thousands, except per share amounts,
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Net sales | $ | 238,263 | $ | 212,820 | $ | 456,641 | $ | 414,884 | ||||||||
| Cost of sales | 107,073 | 96,549 | 204,013 | 189,056 | ||||||||||||
| Gross profit | 131,190 | 116,271 | 252,628 | 225,828 | ||||||||||||
| % of sales | 55.1% | 54.6% | 55.3% | 54.4% | ||||||||||||
| Selling and administrative expense | 100,726 | 89,604 | 199,952 | 174,172 | ||||||||||||
| Research & development expense | 11,806 | 9,985 | 22,381 | 17,696 | ||||||||||||
| Income from operations | 18,658 | 16,682 | 30,295 | 33,960 | ||||||||||||
| % of sales | 7.8% | 7.8% | 6.6% | 8.2% | ||||||||||||
| Interest expense | 11,839 | 5,091 | 21,208 | 9,909 | ||||||||||||
| Other expense | 321 | - | 4,546 | - | ||||||||||||
| Income before income taxes | 6,498 | 11,591 | 4,541 | 24,051 | ||||||||||||
| Provision (benefit) for income taxes | 803 | 2,872 | (2,175 | ) | 4,675 | |||||||||||
| Net income | $ | 5,695 | $ | 8,719 | $ | 6,716 | $ | 19,376 | ||||||||
| Basic EPS | $ | 0.20 | $ | 0.31 | $ | 0.24 | $ | 0.69 | ||||||||
| Diluted EPS | 0.19 | 0.30 | 0.23 | 0.67 | ||||||||||||
| Basic shares | 28,276 | 28,075 | 28,228 | 28,059 | ||||||||||||
| Diluted shares | 29,337 | 28,846 | 29,197 | 28,739 |
(in millions, unaudited)
| Three Months Ended June 30, | ||||||||||||||||||||||||||||||||||||
| % 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 | $ | 115.8 | $ | 110.1 | 5.1% | 1.2% | 6.3% | 5.5% | 4.8% | 2.0% | 6.8% | |||||||||||||||||||||||||
| General Surgery | 122.5 | 102.7 | 19.3% | 0.5% | 19.8% | 24.8% | 8.3% | 1.5% | 9.8% | |||||||||||||||||||||||||||
| $ | 238.3 | $ | 212.8 | 12.0% | 0.8% | 12.8% | 17.6% | 6.0% | 1.8% | 7.8% | ||||||||||||||||||||||||||
| Single-use Products | $ | 190.3 | $ | 171.8 | 10.7% | 0.8% | 11.5% | 17.5% | 3.2% | 1.8% | 5.0% | |||||||||||||||||||||||||
| Capital Products | 48.0 | 41.0 | 17.1% | 1.1% | 18.2% | 18.1% | 16.2% | 2.1% | 18.3% | |||||||||||||||||||||||||||
| $ | 238.3 | $ | 212.8 | 12.0% | 0.8% | 12.8% | 17.6% | 6.0% | 1.8% | 7.8% | ||||||||||||||||||||||||||
| Domestic | $ | 129.0 | $ | 109.7 | 17.6% | 0.0% | 17.6% | |||||||||||||||||||||||||||||
| International | 109.3 | 103.1 | 6.0% | 1.8% | 7.8% | |||||||||||||||||||||||||||||||
| $ | 238.3 | $ | 212.8 | 12.0% | 0.8% | 12.8% |
| Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||
| % 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 | $ | 229.2 | $ | 219.0 | 4.7% | 1.3% | 6.0% | 5.2% | 4.3% | 2.2% | 6.5% | |||||||||||||||||||||||||
| General Surgery | 227.4 | 195.9 | 16.1% | 0.7% | 16.8% | 19.5% | 9.2% | 2.1% | 11.3% | |||||||||||||||||||||||||||
| $ | 456.6 | $ | 414.9 | 10.1% | 1.0% | 11.1% | 13.9% | 5.9% | 2.1% | 8.0% | ||||||||||||||||||||||||||
| Single-use Products | $ | 362.6 | $ | 333.5 | 8.7% | 1.0% | 9.7% | 14.5% | 2.3% | 2.1% | 4.4% | |||||||||||||||||||||||||
| Capital Products | 94.0 | 81.4 | 15.5% | 1.3% | 16.8% | 11.5% | 19.3% | 2.4% | 21.7% | |||||||||||||||||||||||||||
| $ | 456.6 | $ | 414.9 | 10.1% | 1.0% | 11.1% | 13.9% | 5.9% | 2.1% | 8.0% | ||||||||||||||||||||||||||
| Domestic | $ | 245.9 | $ | 215.9 | 13.9% | 0.0% | 13.9% | |||||||||||||||||||||||||||||
| International | 210.7 | 199.0 | 5.9% | 2.1% | 8.0% | |||||||||||||||||||||||||||||||
| $ | 456.6 | $ | 414.9 | 10.1% | 1.0% | 11.1% |
Reconciliation of Reported Net Income
to Adjusted Net Income
(in thousands, except per share amounts,
| Three Months Ended June 30, 2019 | ||||||||||||||||||||||||||||||||||||
| Gross Profit | Selling & Administrative Expense | Operating Income | Interest Expense | Other Expense | Tax Expense/ (Benefit) | Effective Tax Rate | Net Income | Diluted EPS | ||||||||||||||||||||||||||||
| As reported | $ | 131,190 | $ | 100,726 | $ | 18,658 | $ | 11,839 | $ | 321 | $ | 803 | 12.4% | $ | 5,695 | $ | 0.19 | |||||||||||||||||||
| % of sales | 55.1% | 42.3% | 7.8% | |||||||||||||||||||||||||||||||||
| Business acquisition costs (1) | 503 | (2,461 | ) | 2,964 | - | - | 855 | 2,109 | 0.08 | |||||||||||||||||||||||||||
| $ | 131,693 | $ | 98,265 | $ | 21,622 | $ | 11,839 | $ | 321 | $ | 1,658 | $ | 7,804 | $ | 0.27 | |||||||||||||||||||||
| Adjusted gross profit % | 55.3% | |||||||||||||||||||||||||||||||||||
| Amortization (2) | $ | 1,500 | (6,766 | ) | 8,266 | (3,183 | ) | - | 2,840 | 8,609 | 0.29 | |||||||||||||||||||||||||
| Adjusted net income | $ | 91,499 | $ | 29,888 | $ | 8,656 | $ | 321 | $ | 4,498 | 21.5% | $ | 16,413 | $ | 0.56 | |||||||||||||||||||||
| % of sales | 38.4% | 12.5% |
| Three Months Ended June 30, 2018 | ||||||||||||||||||||||||||||||||||||
| Gross Profit | Selling & Administrative Expense | Operating Income | Interest Expense | Other Expense | Tax Expense/ (Benefit) | Effective Tax Rate | Net Income | Diluted EPS | ||||||||||||||||||||||||||||
| As reported | $ | 116,271 | $ | 89,604 | $ | 16,682 | $ | 5,091 | $ | - | $ | 2,872 | 24.8% | $ | 8,719 | $ | 0.30 | |||||||||||||||||||
| % of sales | 54.6% | 42.1% | 7.8% | |||||||||||||||||||||||||||||||||
| Tax reform (3) | - | - | - | - | - | (284 | ) | 284 | 0.01 | |||||||||||||||||||||||||||
| $ | 116,271 | $ | 89,604 | $ | 16,682 | $ | 5,091 | $ | - | $ | 2,588 | $ | 9,003 | 0.31 | ||||||||||||||||||||||
| Adjusted gross profit % | 54.6% | |||||||||||||||||||||||||||||||||||
| Amortization (2) | $ | 1,500 | (4,197 | ) | 5,697 | - | - | 1,405 | 4,292 | 0.15 | ||||||||||||||||||||||||||
| Adjusted net income | $ | 85,407 | $ | 22,379 | $ | 5,091 | $ | - | $ | 3,993 | 23.1% | $ | 13,295 | $ | 0.46 | |||||||||||||||||||||
| % of sales | 40.1% | 10.5% |
(1) In 2019, the Company incurred consulting fees, legal fees, severance and integration related costs associated with the acquisition of Buffalo Filter, LLC.
(2) Includes amortization of intangible assets, deferred financing fees and debt discount.
(3) 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 Adjusted Net Income
(in thousands, except per share amounts,
| Six Months Ended June 30, 2019 | ||||||||||||||||||||||||||||||||||||
| Gross Profit | Selling & Administrative Expense | Operating Income | Interest Expense | Other Expense | Tax Expense/ (Benefit) | Effective Tax Rate | Net Income | Diluted EPS | ||||||||||||||||||||||||||||
| As reported | $ | 252,628 | $ | 199,952 | $ | 30,295 | $ | 21,208 | $ | 4,546 | $ | (2,175 | ) | -47.9% | $ | 6,716 | $ | 0.23 | ||||||||||||||||||
| % of sales | 55.3% | 43.8% | 6.6% | |||||||||||||||||||||||||||||||||
| Business acquisition costs (1) | 1,163 | (9,706 | ) | 10,869 | - | - | 3,182 | 7,687 | 0.26 | |||||||||||||||||||||||||||
| Debt refinancing costs (2) | - | - | - | - | (3,904 | ) | 1,149 | 2,755 | 0.10 | |||||||||||||||||||||||||||
| $ | 253,791 | $ | 190,246 | $ | 41,164 | $ | 21,208 | $ | 642 | $ | 2,156 | $ | 17,158 | $ | 0.59 | |||||||||||||||||||||
| Adjusted gross profit % | 55.6% | |||||||||||||||||||||||||||||||||||
| Amortization (3) | $ | 3,000 | (12,596 | ) | 15,596 | (5,390 | ) | - | 5,248 | 15,738 | 0.54 | |||||||||||||||||||||||||
| Adjusted net income | $ | 177,650 | $ | 56,760 | $ | 15,818 | $ | 642 | $ | 7,404 | 18.4% | $ | 32,896 | $ | 1.13 | |||||||||||||||||||||
| % of sales | 38.9% | 12.4% |
| Six Months Ended June 30, 2018 | ||||||||||||||||||||||||||||||||||||
| Gross Profit | Selling & Administrative Expense | Operating Income | Interest Expense | Other Expense | Tax Expense/ (Benefit) | Effective Tax Rate | Net Income | Diluted EPS | ||||||||||||||||||||||||||||
| As reported | $ | 225,828 | $ | 174,172 | $ | 33,960 | $ | 9,909 | $ | - | $ | 4,675 | 19.4% | $ | 19,376 | $ | 0.67 | |||||||||||||||||||
| % of sales | 54.4% | 42.0% | 8.2% | |||||||||||||||||||||||||||||||||
| Tax reform (4) | - | - | - | - | - | (585 | ) | 585 | 0.02 | |||||||||||||||||||||||||||
| $ | 225,828 | $ | 174,172 | $ | 33,960 | $ | 9,909 | $ | - | $ | 4,090 | $ | 19,961 | $ | 0.69 | |||||||||||||||||||||
| Adjusted gross profit % | 54.4% | |||||||||||||||||||||||||||||||||||
| Amortization (3) | $ | 3,000 | (8,218 | ) | 11,218 | - | - | 2,758 | 8,460 | 0.30 | ||||||||||||||||||||||||||
| Adjusted net income | $ | 165,954 | $ | 45,178 | $ | 9,909 | $ | - | $ | 6,848 | 19.4% | $ | 28,421 | $ | 0.99 | |||||||||||||||||||||
| % of sales | 40.0% | 10.9% |
(1) In 2019, the Company incurred investment banking fees, consulting fees, legal fees, severance 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.
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 | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Net income | $ | 5,695 | $ | 8,719 | $ | 6,716 | $ | 19,376 | ||||||||
| Provision (benefit) for income taxes | 803 | 2,872 | (2,175 | ) | 4,675 | |||||||||||
| Interest expense | 11,839 | 5,091 | 21,208 | 9,909 | ||||||||||||
| Depreciation | 4,525 | 4,504 | 8,967 | 9,006 | ||||||||||||
| Amortization | 13,252 | 10,483 | 25,460 | 20,971 | ||||||||||||
| EBITDA | $ | 36,114 | $ | 31,669 | $ | 60,176 | $ | 63,937 | ||||||||
| Stock based compensation | 3,108 | 2,650 | 5,811 | 4,953 | ||||||||||||
| Business acquisition costs | 2,964 | - | 10,869 | - | ||||||||||||
| Debt refinancing costs | - | - | 3,904 | - | ||||||||||||
| Adjusted EBITDA | $ | 42,186 | $ | 34,319 | $ | 80,760 | $ | 68,890 | ||||||||
| EBITDA Margin | ||||||||||||||||
| EBITDA | 15.2% | 14.9% | 13.2% | 15.4% | ||||||||||||
| Adjusted EBITDA | 17.7% | 16.1% | 17.7% | 16.6% |
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
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, 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
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 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
Net sales on 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.