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 2020 Financial Results
Utica, New York, July 29, 2020
--- CONMED Corporation (NYSE: CNMD) today announced financial results for the second quarter ended June 30, 2020.
Second Quarter 2020 Highlights
am extremely proud of our entire organization's response to the global COVID-19 crisis, the impact of which
is reflected in our second quarter results," commented Curt R. Hartman, CONMED's President,
Chief Executive Officer and Chair of the Board. "The month-over-month
improvements in our revenue, profitability, and cash flow over the course of the quarter are encouraging signs. While we expect
continued uncertainty as a result of the COVID-19 crisis, we feel well positioned as we enter the second half of 2020 and beyond."
Due to the continued uncertainty
created by the COVID-19 pandemic, management is unable to provide financial guidance at this time.
Supplemental Financial Disclosures
(1) A reconciliation
of reported diluted net earnings (loss) per share to adjusted diluted net earnings (loss) per share, a non-GAAP financial measure,
The Company's management will
host a conference call today at 4:30 p.m. ET to discuss its second quarter 2020 results.
To participate in the conference call, dial 1-844-889-7792
(domestic) or +1-661-378-9936 (international) and refer to the passcode 2083716.
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 29, 2020, until 7:30 p.m. ET on Wednesday, August 5, 2020. To hear this recording, dial 1-855-859-2056
(domestic) or +1-404-537-3406 (international) and enter the passcode 2083716.
Consolidated Condensed Statements of
(in thousands, except per share amounts,
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Net sales | $ | 157,785 | $ | 238,263 | $ | 371,796 | $ | 456,641 | ||||||||
| Cost of sales | 85,856 | 107,073 | 180,707 | 204,013 | ||||||||||||
| Gross profit | 71,929 | 131,190 | 191,089 | 252,628 | ||||||||||||
| % of sales | 45.6% | 55.1% | 51.4% | 55.3% | ||||||||||||
| Selling & administrative expense | 84,475 | 100,726 | 180,343 | 199,952 | ||||||||||||
| Research & development expense | 8,700 | 11,806 | 18,820 | 22,381 | ||||||||||||
| Income (loss) from operations | (21,246 | ) | 18,658 | (8,074 | ) | 30,295 | ||||||||||
| % of sales | -13.5% | 7.8% | -2.2% | 6.6% | ||||||||||||
| Interest expense | 11,401 | 11,839 | 20,993 | 21,208 | ||||||||||||
| Other expense | 89 | 321 | 178 | 4,546 | ||||||||||||
| Income (loss) before income taxes | (32,736 | ) | 6,498 | (29,245 | ) | 4,541 | ||||||||||
| Provision (benefit) for income taxes | (5,336 | ) | 803 | (7,772 | ) | (2,175 | ) | |||||||||
| Net income (loss) | $ | (27,400 | ) | $ | 5,695 | $ | (21,473 | ) | $ | 6,716 | ||||||
| Basic EPS | $ | (0.96 | ) | $ | 0.20 | $ | (0.75 | ) | $ | 0.24 | ||||||
| Diluted EPS | (0.96 | ) | 0.19 | (0.75 | ) | 0.23 | ||||||||||
| Basic shares | 28,542 | 28,276 | 28,506 | 28,228 | ||||||||||||
| Diluted shares | 28,542 | 29,337 | 28,506 | 29,197 |
(in millions, unaudited)
| Three Months Ended June 30, | ||||||||||||||||||||||||||||||||||||
| % Change | ||||||||||||||||||||||||||||||||||||
| Domestic | International | |||||||||||||||||||||||||||||||||||
| 2020 | 2019 | As Reported | Impact of Foreign Currency | Constant Currency | As Reported | As Reported | Impact of Foreign Currency | Constant Currency | ||||||||||||||||||||||||||||
| Orthopedic Surgery | $ | 60.5 | $ | 115.8 | -47.7% | 1.5% | -46.2% | -50.6% | -46.0% | 2.5% | -43.5% | |||||||||||||||||||||||||
| General Surgery | 97.3 | 122.5 | -20.6% | 0.8% | -19.8% | -22.9% | -15.3% | 2.8% | -12.5% | |||||||||||||||||||||||||||
| $ | 157.8 | $ | 238.3 | -33.8% | 1.2% | -32.6% | -32.2% | -35.6% | 2.6% | -33.0% | ||||||||||||||||||||||||||
| Single-use Products | $ | 128.5 | $ | 190.3 | -32.4% | 1.1% | -31.3% | -27.5% | -38.7% | 2.5% | -36.2% | |||||||||||||||||||||||||
| Capital Products | 29.3 | 48.0 | -39.0% | 1.3% | -37.7% | -54.2% | -25.4% | 2.9% | -22.5% | |||||||||||||||||||||||||||
| $ | 157.8 | $ | 238.3 | -33.8% | 1.2% | -32.6% | -32.2% | -35.6% | 2.6% | -33.0% | ||||||||||||||||||||||||||
| Domestic | $ | 87.4 | $ | 129.0 | -32.2% | 0.0% | -32.2% | |||||||||||||||||||||||||||||
| International | 70.4 | 109.3 | -35.6% | 2.6% | -33.0% | |||||||||||||||||||||||||||||||
| $ | 157.8 | $ | 238.3 | -33.8% | 1.2% | -32.6% |
| Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||
| % Change | ||||||||||||||||||||||||||||||||||||
| Domestic | International | |||||||||||||||||||||||||||||||||||
| 2020 | 2019 | As Reported | Impact of Foreign Currency | Constant Currency | As Reported | As Reported | Impact of Foreign Currency | Constant Currency | ||||||||||||||||||||||||||||
| Orthopedic Surgery | $ | 159.8 | $ | 229.2 | -30.3% | 1.7% | -28.6% | -34.0% | -27.9% | 2.8% | -25.1% | |||||||||||||||||||||||||
| General Surgery | 212.0 | 227.4 | -6.8% | 0.8% | -6.0% | -6.1% | -8.4% | 2.4% | -6.0% | |||||||||||||||||||||||||||
| $ | 371.8 | $ | 456.6 | -18.6% | 1.3% | -17.3% | -16.1% | -21.4% | 2.7% | -18.7% | ||||||||||||||||||||||||||
| Single-use Products | $ | 306.2 | $ | 362.6 | -15.6% | 1.3% | -14.3% | -11.6% | -20.5% | 2.8% | -17.7% | |||||||||||||||||||||||||
| Capital Products | 65.6 | 94.0 | -30.2% | 1.1% | -29.1% | -36.8% | -24.4% | 2.3% | -22.1% | |||||||||||||||||||||||||||
| $ | 371.8 | $ | 456.6 | -18.6% | 1.3% | -17.3% | -16.1% | -21.4% | 2.7% | -18.7% | ||||||||||||||||||||||||||
| Domestic | $ | 206.3 | $ | 245.9 | -16.1% | 0.0% | -16.1% | |||||||||||||||||||||||||||||
| International | 165.5 | 210.7 | -21.4% | 2.7% | -18.7% | |||||||||||||||||||||||||||||||
| $ | 371.8 | $ | 456.6 | -18.6% | 1.3% | -17.3% |
Reconciliation of Reported Net Income
(Loss) to Adjusted Net Income (Loss)
(in thousands, except per share amounts,
| Three Months Ended June 30, 2020 | ||||||||||||||||||||||||||||||||||||
| Gross Profit | Selling & Administrative Expense | Operating Income (Loss) | Interest Expense | Other Expense | Tax Expense/ (Benefit) | Effective Tax Rate | Net Income (Loss) | Diluted EPS | ||||||||||||||||||||||||||||
| As reported | $ | 71,929 | $ | 84,475 | $ | (21,246 | ) | $ | 11,401 | $ | 89 | $ | (5,336 | ) | 16.3% | $ | (27,400 | ) | $ | (0.96 | ) | |||||||||||||||
| % of sales | 45.6% | 53.5% | -13.5% | |||||||||||||||||||||||||||||||||
| Plant underutilization costs (1) | 6,586 | - | 6,586 | - | - | 739 | 5,847 | 0.21 | ||||||||||||||||||||||||||||
| Product rationalization costs (2) | 2,169 | (2,095 | ) | 4,264 | - | - | 460 | 3,804 | 0.13 | |||||||||||||||||||||||||||
| Restructuring costs (3) | 1,087 | (2,124 | ) | 3,211 | - | - | 346 | 2,865 | 0.10 | |||||||||||||||||||||||||||
| Manufacturing consolidation costs (4) | 1,602 | - | 1,602 | - | - | 144 | 1,458 | 0.05 | ||||||||||||||||||||||||||||
| Acquisition and integration costs (5) | 652 | (439 | ) | 1,091 | - | - | 119 | 972 | 0.03 | |||||||||||||||||||||||||||
| $ | 84,025 | $ | 79,817 | $ | (4,492 | ) | $ | 11,401 | $ | 89 | $ | (3,528 | ) | $ | (12,454 | ) | $ | (0.44 | ) | |||||||||||||||||
| Adjusted gross profit % | 53.3% | |||||||||||||||||||||||||||||||||||
| Amortization (6) | $ | 1,500 | (6,955 | ) | 8,455 | (3,413 | ) | - | 1,280 | 10,588 | 0.37 | |||||||||||||||||||||||||
| Adjusted net loss | $ | 72,862 | $ | 3,963 | $ | 7,988 | $ | 89 | $ | (2,248 | ) | 54.6% | $ | (1,866 | ) | $ | (0.07 | ) | ||||||||||||||||||
| % of sales | 46.2% | 2.5% |
| Three Months Ended June 30, 2019 | ||||||||||||||||||||||||||||||||||||
| Gross Profit | Selling & Administrative Expense | Operating Income | Interest Expense | Other Expense | Tax Expense | 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% | |||||||||||||||||||||||||||||||||
| Acquisition and integration costs (5) | 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 (6) | $ | 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% |
| (1) In 2020, the Company incurred a charge related to plant underutilization due to abnormally low production as a result of decreased sales caused by the COVID-19 pandemic. |
| (2) In 2020, the Company performed an analysis of product lines and determined certain catalog numbers, principally related to capital equipment, would be discontinued and consolidated into existing product offerings resulting in a charge to cost of sales. We also wrote-off related field inventory used for customer demonstration and evaluation of the discontinued products to selling and administrative expense. |
| (3) In 2020, the Company incurred restructuring costs related to a voluntary separation arrangement with employees as a result of the COVID-19 pandemic and restructuring of the Orthopedic sales force. |
| (4) In 2020, the Company incurred costs related to the consolidation of certain manufacturing operations. These costs related to winding down operations at certain locations and moving production lines to other facilities. |
| (5) In 2020, the Company incurred inventory adjustments associated with a prior acquisition and integration and severance costs mainly related to the acquisition of Buffalo Filter, LLC. In 2019, the Company incurred consulting fees, legal fees and integration related costs associated with the acquisition of Buffalo Filter, LLC. |
| (6) Includes amortization of intangible assets, deferred financing fees and debt discount. |
Reconciliation of Reported Net Income
(Loss) to Adjusted Net Income
(in thousands, except per share amounts,
| Six Months Ended June 30, 2020 | ||||||||||||||||||||||||||||||||||||
| Gross Profit | Selling & Administrative Expense | Operating Income (Loss) | Interest Expense | Other Expense | Tax Expense/ (Benefit) | Effective Tax Rate | Net Income (Loss) | Diluted EPS | ||||||||||||||||||||||||||||
| As reported | $ | 191,089 | $ | 180,343 | $ | (8,074 | ) | $ | 20,993 | $ | 178 | $ | (7,772 | ) | 26.6% | $ | (21,473 | ) | $ | (0.75 | ) | |||||||||||||||
| % of sales | 51.4% | 48.5% | -2.2% | |||||||||||||||||||||||||||||||||
| Plant underutilization costs (1) | 6,586 | - | 6,586 | - | - | 739 | 5,847 | 0.20 | ||||||||||||||||||||||||||||
| Product rationalization costs (2) | 2,169 | (2,095 | ) | 4,264 | - | - | 460 | 3,804 | 0.13 | |||||||||||||||||||||||||||
| Restructuring costs (3) | 1,087 | (2,124 | ) | 3,211 | - | - | 346 | 2,865 | 0.10 | |||||||||||||||||||||||||||
| Manufacturing consolidation costs (4) | 3,387 | - | 3,387 | - | - | 837 | 2,550 | 0.09 | ||||||||||||||||||||||||||||
| Acquisition and integration costs (5) | 1,457 | (1,192 | ) | 2,649 | - | - | 722 | 1,927 | 0.07 | |||||||||||||||||||||||||||
| $ | 205,775 | $ | 174,932 | $ | 12,023 | $ | 20,993 | $ | 178 | $ | (4,668 | ) | $ | (4,480 | ) | $ | (0.16 | ) | ||||||||||||||||||
| Adjusted gross profit % | 55.3% | |||||||||||||||||||||||||||||||||||
| Amortization (6) | $ | 3,000 | (13,954 | ) | 16,954 | (6,497 | ) | - | 5,775 | 17,676 | 0.62 | |||||||||||||||||||||||||
| Adjusted net income | $ | 160,978 | $ | 28,977 | $ | 14,496 | $ | 178 | $ | 1,107 | 7.7% | $ | 13,196 | $ | 0.46 | |||||||||||||||||||||
| % of sales | 43.3% | 7.8% |
| 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% | |||||||||||||||||||||||||||||||||
| Acquisition and integration costs (5) | 1,163 | (9,706 | ) | 10,869 | - | - | 3,182 | 7,687 | 0.26 | |||||||||||||||||||||||||||
| Debt refinancing costs (7) | - | - | - | - | (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 (6) | $ | 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% |
| (1) In 2020, the Company incurred a charge related to plant underutilization due to abnormally low production as a result of decreased sales caused by the COVID-19 pandemic. |
| (2) In 2020, the Company performed an analysis of product lines and determined certain catalog numbers, principally related to capital equipment, would be discontinued and consolidated into existing product offerings resulting in a charge to cost of sales. We also wrote-off related field inventory used for customer demonstration and evaluation of the discontinued products to selling and administrative expense. |
| (3) In 2020, the Company incurred restructuring costs related to a voluntary separation arrangement with employees as a result of the COVID-19 pandemic and restructuring of the Orthopedic sales force. |
| (4) In 2020, the Company incurred costs related to the consolidation of certain manufacturing operations. These costs related to winding down operations at certain locations and moving production lines to other facilities. |
| (5) In 2020, the Company incurred inventory adjustments associated with a prior acquisition and integration and severance costs mainly related to the acquisition of Buffalo Filter, LLC. In 2019, the Company incurred investment banking fees, consulting fees, legal fees and integration related costs associated with the acquisition of Buffalo Filter, LLC. |
| (6) Includes amortization of intangible assets, deferred financing fees and debt discount. |
| (7) 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. |
Reconciliation of Reported Net Income
(Loss) to EBITDA & Adjusted EBITDA
(in thousands, unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Net income (loss) | $ | (27,400 | ) | $ | 5,695 | $ | (21,473 | ) | $ | 6,716 | ||||||
| Provision (benefit) from income taxes | (5,336 | ) | 803 | (7,772 | ) | (2,175 | ) | |||||||||
| Interest expense | 11,401 | 11,839 | 20,993 | 21,208 | ||||||||||||
| Depreciation | 4,588 | 4,525 | 9,234 | 8,967 | ||||||||||||
| Amortization | 13,616 | 13,252 | 27,392 | 25,460 | ||||||||||||
| EBITDA | $ | (3,131 | ) | $ | 36,114 | $ | 28,374 | $ | 60,176 | |||||||
| Stock based compensation | 3,555 | 3,108 | 6,587 | 5,811 | ||||||||||||
| Plant underutilization costs | 6,586 | - | 6,586 | - | ||||||||||||
| Product rationalization costs | 4,264 | - | 4,264 | - | ||||||||||||
| Restructuring costs | 3,211 | - | 3,211 | - | ||||||||||||
| Manufacturing consolidation costs | 1,602 | - | 3,387 | - | ||||||||||||
| Acquisition and integration costs | 1,091 | 2,964 | 2,649 | 10,869 | ||||||||||||
| Debt refinancing costs | - | - | - | 3,904 | ||||||||||||
| Adjusted EBITDA | $ | 17,178 | $ | 42,186 | $ | 55,058 | $ | 80,760 | ||||||||
| EBITDA Margin | ||||||||||||||||
| EBITDA | -2.0% | 15.2% | 7.6% | 13.2% | ||||||||||||
| Adjusted EBITDA | 10.9% | 17.7% | 14.8% | 17.7% |
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 risks posed to the Company's business, financial condition, and results of operations by the COVID-19
global pandemic and the various government responses to the pandemic, including deferral of surgeries, reductions in hospital and
ambulatory surgery center operating volumes, disruption to potential supply chain reliability, as well as the risk factors discussed
in the Company's Annual Report on Form 10-K for the full year ended December 31, 2019, 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 operating income (loss);
adjusted interest expense; adjusted other expense; adjusted income tax expense (benefit); adjusted effective income tax rate; adjusted
net income (loss), adjusted diluted shares and adjusted diluted net earnings (loss) 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, operating income (loss),
interest expense, other expense, income tax expense (benefit), effective income tax rate, net income (loss), diluted shares and
diluted net earnings (loss) 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.