Full Press Release Details
| NEWS RELEASE | |
| CONTACT : | |
| CONMED Corporation | |
| Todd Garner | |
| Chief Financial Officer | |
| 315-624-3317 | |
| ToddGarner@conmed.com |
CONMED Corporation Announces
Third Quarter 2019 Financial Results
Utica, New York, October 30,
2019 --- CONMED Corporation (Nasdaq: CNMD) today announced financial results for the third quarter of 2019.
Third Quarter 2019 Highlights
"Our solid third quarter results
were balanced across our product lines and geographies," commented Curt R. Hartman, CONMED's President and Chief Executive
Officer. "We are delivering on our commitment to drive increased profitability, while also continuing to invest for sustainable
above-market growth on the top and bottom lines. We believe the strong year-to-date performance in 2019 positions us well to continue
to deliver at least mid-single-digit revenue growth and double-digit adjusted earnings growth in 2020 and beyond."
The Company is maintaining its full-year
organic constant currency sales growth guidance of between 6.0% and 6.5% and is increasing its estimated revenue contribution from
the Buffalo Filter product line to between $47 million and $48 million (previously $44 million to $47 million). Based on recent
exchange rates, the negative impact to 2019 sales from foreign exchange is now expected to be approximately 80 basis points, an
increase from the previous estimate of 50 basis points. As a result, the Company now expects full-year 2019 reported sales in the
range of approximately $951 million to $957 million.
The Company is also increasing its
guidance for adjusted diluted net earnings per share to the range of $2.62 to $2.65 from the previous range of $2.52 to $2.57.
This represents growth over 2018 of approximately 20.2% to 21.6%. 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 $32 to $34 million, net of tax. Also excluded are the costs of special items, including acquisition costs, manufacturing
consolidation costs and debt refinancing costs, which are estimated in the range of $15 to $17 million, net of tax.
Supplemental Financial Disclosures
(1) A reconciliation
of reported operating margin to adjusted operating margin, a non-GAAP financial measure, appears below.
(2) 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 third quarter 2019 results.
To participate in the conference
call, dial 1-844-889-7792 (domestic) or +1-661-378-9936 (international) and refer to the passcode 8990458.
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, October 30, 2019, until 6:30 p.m. ET on Thursday, November 14, 2019. To hear this
recording, dial 1-855-859-2056 (domestic) or +1-404-537-3406 (international) and enter the passcode 8990458.
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, adjusted diluted shares 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 measures.
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,
diluted shares 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 single financial measure.
Consolidated Condensed Statements of Income
(in thousands, except per share amounts,
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Net sales | $ | 233,590 | $ | 202,307 | $ | 690,232 | $ | 617,191 | ||||||||
| Cost of sales | 103,479 | 91,680 | 307,492 | 280,736 | ||||||||||||
| Gross profit | 130,111 | 110,627 | 382,740 | 336,455 | ||||||||||||
| % of sales | 55.7% | 54.7% | 55.5% | 54.5% | ||||||||||||
| Selling and administrative expense | 98,187 | 84,983 | 298,140 | 259,156 | ||||||||||||
| Research & development expense | 10,985 | 14,122 | 33,366 | 31,817 | ||||||||||||
| Income from operations | 20,939 | 11,522 | 51,234 | 45,482 | ||||||||||||
| % of sales | 9.0% | 5.7% | 7.4% | 7.4% | ||||||||||||
| Interest expense | 11,174 | 5,214 | 32,382 | 15,123 | ||||||||||||
| Other expense | 321 | - | 4,867 | - | ||||||||||||
| Income before income taxes | 9,444 | 6,308 | 13,985 | 30,359 | ||||||||||||
| Provision for income taxes | 2,474 | 483 | 299 | 5,158 | ||||||||||||
| Net income | $ | 6,970 | $ | 5,825 | $ | 13,686 | $ | 25,201 | ||||||||
| Basic EPS | $ | 0.25 | $ | 0.21 | $ | 0.48 | $ | 0.90 | ||||||||
| Diluted EPS | 0.23 | 0.20 | 0.47 | 0.87 | ||||||||||||
| Basic shares | 28,353 | 28,124 | 28,280 | 28,096 | ||||||||||||
| Diluted shares | 29,792 | 29,088 | 29,354 | 28,872 |
(in millions, unaudited)
| Three Months Ended September 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 | $ | 110.3 | $ | 102.9 | 7.2% | 0.4% | 7.6% | 7.5% | 7.0% | 0.6% | 7.6% | |||||||||||||||||||||||||
| General Surgery | 123.3 | 99.4 | 24.0% | 0.0% | 24.0% | 26.0% | 19.7% | 0.0% | 19.7% | |||||||||||||||||||||||||||
| $ | 233.6 | $ | 202.3 | 15.5% | 0.1% | 15.6% | 19.2% | 11.2% | 0.4% | 11.6% | ||||||||||||||||||||||||||
| Single-use Products | $ | 184.4 | $ | 159.4 | 15.6% | 0.2% | 15.8% | 19.7% | 10.7% | 0.4% | 11.1% | |||||||||||||||||||||||||
| Capital Products | 49.2 | 42.9 | 14.8% | 0.4% | 15.2% | 17.0% | 12.8% | 0.7% | 13.5% | |||||||||||||||||||||||||||
| $ | 233.6 | $ | 202.3 | 15.5% | 0.1% | 15.6% | 19.2% | 11.2% | 0.4% | 11.6% | ||||||||||||||||||||||||||
| Domestic | $ | 128.2 | $ | 107.5 | 19.2% | 0.0% | 19.2% | |||||||||||||||||||||||||||||
| International | 105.4 | 94.8 | 11.2% | 0.4% | 11.6% | |||||||||||||||||||||||||||||||
| $ | 233.6 | $ | 202.3 | 15.5% | 0.1% | 15.6% |
(in millions, unaudited)
| Nine Months Ended September 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 | $ | 339.5 | $ | 321.9 | 5.5% | 1.0% | 6.5% | 5.9% | 5.2% | 1.7% | 6.9% | |||||||||||||||||||||||||
| General Surgery | 350.7 | 295.3 | 18.8% | 0.4% | 19.2% | 21.7% | 12.6% | 1.4% | 14.0% | |||||||||||||||||||||||||||
| $ | 690.2 | $ | 617.2 | 11.8% | 0.8% | 12.6% | 15.7% | 7.6% | 1.6% | 9.2% | ||||||||||||||||||||||||||
| Single-use Products | $ | 547.0 | $ | 493.0 | 11.0% | 0.7% | 11.7% | 16.2% | 5.0% | 1.5% | 6.5% | |||||||||||||||||||||||||
| Capital Products | 143.2 | 124.2 | 15.3% | 0.9% | 16.2% | 13.4% | 17.0% | 1.9% | 18.9% | |||||||||||||||||||||||||||
| $ | 690.2 | $ | 617.2 | 11.8% | 0.8% | 12.6% | 15.7% | 7.6% | 1.6% | 9.2% | ||||||||||||||||||||||||||
| Domestic | $ | 374.1 | $ | 323.4 | 15.7% | 0.0% | 15.7% | |||||||||||||||||||||||||||||
| International | 316.1 | 293.8 | 7.6% | 1.6% | 9.2% | |||||||||||||||||||||||||||||||
| $ | 690.2 | $ | 617.2 | 11.8% | 0.8% | 12.6% |
Reconciliation of Reported Net Income to
(in thousands, except per share amounts, unaudited)
| Three Months Ended September 30, 2019 | ||||||||||||||||||||||||||||||||||||||||
| Gross Profit | Selling & Administrative Expense | Research & Development Expense | Operating Income | Interest Expense | Other Expense | Tax Expense | Effective Tax Rate | Net Income | Diluted EPS | |||||||||||||||||||||||||||||||
| As reported | $ | 130,111 | $ | 98,187 | $ | 10,985 | $ | 20,939 | $ | 11,174 | $ | 321 | $ | 2,474 | 26.2% | $ | 6,970 | $ | 0.23 | |||||||||||||||||||||
| % of sales | 55.7% | 42.0% | 4.7% | 9.0% | ||||||||||||||||||||||||||||||||||||
| Business acquisition costs (1) | 171 | (1,490 | ) | - | 1,661 | - | - | 290 | 1,371 | 0.05 | ||||||||||||||||||||||||||||||
| Manufacturing consolidation costs (2) | 1,430 | - | - | 1,430 | - | - | 249 | 1,181 | 0.04 | |||||||||||||||||||||||||||||||
| $ | 131,712 | $ | 96,697 | $ | 10,985 | $ | 24,030 | $ | 11,174 | $ | 321 | $ | 3,013 | $ | 9,522 | $ | 0.32 | |||||||||||||||||||||||
| Adjusted gross profit % | 56.4% | |||||||||||||||||||||||||||||||||||||||
| Amortization (3) | $ | 1,500 | (6,841 | ) | - | 8,341 | (3,183 | ) | - | 2,808 | 8,716 | 0.30 | ||||||||||||||||||||||||||||
| Adjusted net income | $ | 89,856 | $ | 10,985 | $ | 32,371 | $ | 7,991 | $ | 321 | $ | 5,821 | 24.2% | $ | 18,238 | $ | 0.62 | |||||||||||||||||||||||
| % of sales | 38.5% | 4.7% | 13.9% | |||||||||||||||||||||||||||||||||||||
| Diluted shares, as reported | 29,792 | |||||||||||||||||||||||||||||||||||||||
| In-the-money portion of convertible notes (4) | (204 | ) | ||||||||||||||||||||||||||||||||||||||
| Diluted shares, as adjusted | 29,588 |
| Three Months Ended September 30, 2018 | ||||||||||||||||||||||||||||||||||||||||
| Gross Profit | Selling & Administrative Expense | Research & Development Expense | Operating Income | Interest Expense | Other Expense | Tax Expense | Effective Tax Rate | Net Income | Diluted EPS | |||||||||||||||||||||||||||||||
| As reported | $ | 110,627 | $ | 84,983 | $ | 14,122 | $ | 11,522 | $ | 5,214 | $ | - | $ | 483 | 7.7% | $ | 5,825 | $ | 0.20 | |||||||||||||||||||||
| % of sales | 54.7% | 42.0% | 7.0% | 5.7% | ||||||||||||||||||||||||||||||||||||
| Business acquisition costs (5) | - | (1,073 | ) | - | 1,073 | - | - | 259 | 814 | 0.03 | ||||||||||||||||||||||||||||||
| Impairment charges (6) | - | - | (4,212 | ) | 4,212 | - | - | 2,117 | 2,095 | 0.07 | ||||||||||||||||||||||||||||||
| Tax reform (7) | - | - | - | - | - | - | 37 | (37 | ) | (0.00 | ) | |||||||||||||||||||||||||||||
| $ | 110,627 | $ | 83,910 | $ | 9,910 | $ | 16,807 | $ | 5,214 | $ | - | $ | 2,896 | $ | 8,697 | 0.30 | ||||||||||||||||||||||||
| Adjusted gross profit % | 54.7% | |||||||||||||||||||||||||||||||||||||||
| Amortization (3) | $ | 1,500 | (4,460 | ) | - | 5,960 | - | - | 1,400 | 4,560 | 0.16 | |||||||||||||||||||||||||||||
| Adjusted net income | $ | 79,450 | $ | 9,910 | $ | 22,767 | $ | 5,214 | $ | - | $ | 4,296 | 24.5% | $ | 13,257 | $ | 0.46 | |||||||||||||||||||||||
| % of sales | 39.3% | 4.9% | 11.3% |
(1) In 2019, the Company
incurred consulting fees, legal fees, severance and integration related costs associated with the acquisition of Buffalo Filter,
(2) In 2019, the Company
mainly incurred severance costs in connection with consolidation of certain manufacturing operations.
(3) Includes amortization