Full Press Release Details
| NEWS RELEASE | |
| CONTACT : | |
| CONMED Corporation | |
| Todd Garner | |
| Chief Financial Officer | |
| 315-624-3317 | |
| ToddGarner@conmed.com |
CONMED Corporation Announces
Fourth Quarter and Full-Year 2020 Financial Results
Largo, Florida, January 27, 2021
--- CONMED Corporation (NYSE: CNMD) today announced financial results for the fourth quarter ended December 31, 2020.
Fourth Quarter 2020 Highlights
Full-Year 2020 Highlights
"I am very pleased with the
agility and resilience that our team showed as it responded to a challenging fourth quarter operating environment, which reflected
the ongoing impacts from COVID-19 on our customers' surgical procedure volumes." commented Curt R. Hartman, CONMED's
Chair of the Board, President, and Chief Executive Officer. "While challenges remain as we enter 2021, we expect to see improvement
in procedure volumes as vaccines become more readily available. I remain confident that CONMED enters 2021 better positioned than
ever to achieve long-term success as we continue to deliver innovative products to our customers."
The Company expects full-year 2021
revenue between $975 million and $1.02 billion. Based on recent exchange rates, foreign exchange is expected to be immaterial to
2021 financial results.
The Company also forecasts full-year
2021 adjusted diluted net earnings per share in the range of $2.85 to $3.05.
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 fourth 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 4987274.
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, January 27, 2021, until 7:30 p.m. ET on Wednesday, February 3, 2021. To hear this
recording, dial 1-855-859-2056 (domestic) or +1-404-537-3406 (international) and enter the passcode 4987274.
Consolidated Condensed Statements of
(in thousands, except per share amounts,
| Three Months Ended | Year Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Net sales | $ | 252,828 | $ | 264,865 | $ | 862,459 | $ | 955,097 | ||||||||
| Cost of sales | 117,314 | 122,890 | 402,159 | 430,382 | ||||||||||||
| Gross profit | 135,514 | 141,975 | 460,300 | 524,715 | ||||||||||||
| % of sales | 53.6% | 53.6% | 53.4% | 54.9% | ||||||||||||
| Selling & administrative expense | 99,097 | 102,002 | 373,817 | 400,141 | ||||||||||||
| Research & development expense | 11,716 | 12,094 | 40,473 | 45,460 | ||||||||||||
| Income from operations | 24,701 | 27,879 | 46,010 | 79,114 | ||||||||||||
| % of sales | 9.8% | 10.5% | 5.3% | 8.3% | ||||||||||||
| Interest expense | 11,114 | 10,319 | 44,052 | 42,701 | ||||||||||||
| Other expense | 89 | 321 | 355 | 5,188 | ||||||||||||
| Income before income taxes | 13,498 | 17,239 | 1,603 | 31,225 | ||||||||||||
| Provision (benefit) for income taxes | (10,642 | ) | 2,306 | (7,914 | ) | 2,605 | ||||||||||
| Net income | $ | 24,140 | $ | 14,933 | $ | 9,517 | $ | 28,620 | ||||||||
| Basic EPS | $ | 0.84 | $ | 0.53 | $ | 0.33 | $ | 1.01 | ||||||||
| Diluted EPS | 0.81 | 0.49 | 0.32 | 0.97 | ||||||||||||
| Basic shares | 28,745 | 28,403 | 28,581 | 28,325 | ||||||||||||
| Diluted shares | 29,941 | 30,504 | 29,464 | 29,495 |
(in millions, unaudited)
| Three Months Ended December 31, | ||||||||||||||||||||||||||||||||||||
| % 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 | $ | 112.7 | $ | 123.8 | -8.9% | -0.7% | -9.6% | -12.3% | -6.8% | -1.1% | -7.9% | |||||||||||||||||||||||||
| General Surgery | 140.1 | 141.1 | -0.7% | -0.6% | -1.3% | 5.3% | -12.8% | -1.9% | -14.7% | |||||||||||||||||||||||||||
| $ | 252.8 | $ | 264.9 | -4.5% | -0.7% | -5.2% | -0.7% | -9.1% | -1.4% | -10.5% | ||||||||||||||||||||||||||
| Single-use Products | $ | 205.9 | $ | 209.3 | -1.6% | -0.6% | -2.2% | 4.0% | -8.8% | -1.3% | -10.1% | |||||||||||||||||||||||||
| Capital Products | 46.9 | 55.6 | -15.5% | -0.9% | -16.4% | -21.6% | -10.0% | -1.7% | -11.7% | |||||||||||||||||||||||||||
| $ | 252.8 | $ | 264.9 | -4.5% | -0.7% | -5.2% | -0.7% | -9.1% | -1.4% | -10.5% | ||||||||||||||||||||||||||
| Domestic | $ | 141.6 | $ | 142.5 | -0.7% | 0.0% | -0.7% | |||||||||||||||||||||||||||||
| International | 111.2 | 122.4 | -9.1% | -1.4% | -10.5% | |||||||||||||||||||||||||||||||
| $ | 252.8 | $ | 264.9 | -4.5% | -0.7% | -5.2% |
| Year Ended December 31, | ||||||||||||||||||||||||||||||||||||
| % 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 | $ | 374.7 | $ | 463.3 | -19.1% | 0.7% | -18.4% | -22.1% | -17.2% | 1.2% | -16.0% | |||||||||||||||||||||||||
| General Surgery | 487.8 | 491.8 | -0.8% | 0.1% | -0.7% | 1.5% | -5.9% | 0.3% | -5.6% | |||||||||||||||||||||||||||
| $ | 862.5 | $ | 955.1 | -9.7% | 0.4% | -9.3% | -6.7% | -13.2% | 0.8% | -12.4% | ||||||||||||||||||||||||||
| Single-use Products | $ | 703.0 | $ | 756.3 | -7.0% | 0.4% | -6.6% | -2.9% | -12.3% | 1.0% | -11.3% | |||||||||||||||||||||||||
| Capital Products | 159.5 | 198.8 | -19.8% | 0.2% | -19.6% | -23.6% | -16.3% | 0.5% | -15.8% | |||||||||||||||||||||||||||
| $ | 862.5 | $ | 955.1 | -9.7% | 0.4% | -9.3% | -6.7% | -13.2% | 0.8% | -12.4% | ||||||||||||||||||||||||||
| Domestic | $ | 482.1 | $ | 516.7 | -6.7% | 0.0% | -6.7% | |||||||||||||||||||||||||||||
| International | 380.4 | 438.4 | -13.2% | 0.8% | -12.4% | |||||||||||||||||||||||||||||||
| $ | 862.5 | $ | 955.1 | -9.7% | 0.4% | -9.3% |
Reconciliation of Reported Net Income
to Adjusted Net Income
(in thousands, except per share amounts,
| Three Months Ended December 31, 2020 | ||||||||||||||||||||||||||||||||||||
| Gross Profit | Selling & Administrative Expense | Operating Income | Interest Expense | Other Expense | Tax Expense/ (Benefit) | Effective Tax Rate | Net Income | Diluted EPS | ||||||||||||||||||||||||||||
| As reported | $ | 135,514 | $ | 99,097 | $ | 24,701 | $ | 11,114 | $ | 89 | $ | (10,642 | ) | -78.8% | $ | 24,140 | $ | 0.81 | ||||||||||||||||||
| % of sales | 53.6% | 39.2% | 9.8% | |||||||||||||||||||||||||||||||||
| Restructuring and related costs (1) | - | (1,649 | ) | 1,649 | - | - | 1,548 | 101 | 0.00 | |||||||||||||||||||||||||||
| Acquisition and integration costs (2) | 567 | - | 567 | - | - | 532 | 35 | 0.00 | ||||||||||||||||||||||||||||
| $ | 136,081 | $ | 97,448 | $ | 26,917 | $ | 11,114 | $ | 89 | $ | (8,562 | ) | $ | 24,276 | $ | 0.81 | ||||||||||||||||||||
| Adjusted gross profit % | 53.8% | |||||||||||||||||||||||||||||||||||
| Amortization (4) | $ | 1,500 | (6,998 | ) | 8,498 | (3,479 | ) | - | 11,242 | 735 | 0.03 | |||||||||||||||||||||||||
| Adjusted net income | $ | 90,450 | $ | 35,415 | $ | 7,635 | $ | 89 | $ | 2,680 | 9.7% | $ | 25,011 | $ | 0.84 | |||||||||||||||||||||
| % of sales | 35.8% | 14.0% | ||||||||||||||||||||||||||||||||||
| Diluted shares, as reported | 29,941 | |||||||||||||||||||||||||||||||||||
| In-the-money portion of convertible notes (5) | (236 | ) | ||||||||||||||||||||||||||||||||||
| Diluted shares, as adjusted | 29,705 |
| Three Months Ended December 31, 2019 | ||||||||||||||||||||||||||||||||||||
| Gross Profit | Selling & Administrative Expense | Operating Income | Interest Expense | Other Expense | Tax Expense | Effective Tax Rate | Net Income | Diluted EPS | ||||||||||||||||||||||||||||
| As reported | $ | 141,975 | $ | 102,002 | $ | 27,879 | $ | 10,319 | $ | 321 | $ | 2,306 | 13.4% | $ | 14,933 | $ | 0.49 | |||||||||||||||||||
| % of sales | 53.6% | 38.5% | 10.5% | |||||||||||||||||||||||||||||||||
| Acquisition and integration costs (2) | - | (1,870 | ) | 1,870 | - | - | 137 | 1,733 | 0.06 | |||||||||||||||||||||||||||
| Manufacturing consolidation costs (3) | 1,430 | - | 1,430 | - | - | 105 | 1,325 | 0.05 | ||||||||||||||||||||||||||||
| $ | 143,405 | $ | 100,132 | $ | 31,179 | $ | 10,319 | $ | 321 | $ | 2,548 | $ | 17,991 | $ | 0.60 | |||||||||||||||||||||
| Adjusted gross profit % | 54.1% | |||||||||||||||||||||||||||||||||||
| Amortization (4) | $ | 1,500 | (6,639 | ) | 8,139 | (3,183 | ) | - | 2,535 | 8,787 | 0.30 | |||||||||||||||||||||||||
| Adjusted net income | $ | 93,493 | $ | 39,318 | $ | 7,136 | $ | 321 | $ | 5,083 | 15.9% | $ | 26,778 | $ | 0.90 | |||||||||||||||||||||
| % of sales | 35.3% | 14.8% | ||||||||||||||||||||||||||||||||||
| Diluted shares, as reported | 30,504 | |||||||||||||||||||||||||||||||||||
| In-the-money portion of convertible notes (5) | (643 | ) | ||||||||||||||||||||||||||||||||||
| Diluted shares, as adjusted | 29,861 |
(1) In 2020, the Company incurred restructuring costs related to restructuring of our sales force.
(2) In 2020, the Company incurred inventory adjustments associated with a prior acquisition. In 2019, the Company incurred inventory adjustments, consulting fees, legal fees, severance and integration related costs associated with the acquisition of Buffalo Filter, LLC.
(3) In 2019, 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.
(4) Includes amortization of intangible assets, deferred financing fees and debt discount.
Q4 2020 and 2019, the Company's average share price exceeded the conversion price of our 2.625% convertible notes due in
2024 (the "Notes"). Non-GAAP adjusted dilutive weighted average shares outstanding exclude dilution
that is expected to be offset by the Company's convertible note hedge transactions.
Reconciliation of Reported Net Income
to Adjusted Net Income
(in thousands, except per share amounts,
| Year Ended December 31, 2020 | ||||||||||||||||||||||||||||||||||||
| Gross Profit | Selling & Administrative Expense | Operating Income | Interest Expense | Other Expense | Tax Expense/ (Benefit) | Effective Tax Rate | Net Income | Diluted EPS | ||||||||||||||||||||||||||||
| As reported | $ | 460,300 | $ | 373,817 | $ | 46,010 | $ | 44,052 | $ | 355 | $ | (7,914 | ) | -493.9% | $ | 9,517 | $ | 0.32 | ||||||||||||||||||
| % of sales | 53.4% | 43.3% | 5.3% | |||||||||||||||||||||||||||||||||
| 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 and related costs (3) | 1,087 | (4,782 | ) | 5,869 | - | - | 1,807 | 4,062 | 0.14 | |||||||||||||||||||||||||||
| Acquisition and integration costs (4) | 2,820 | (1,192 | ) | 4,012 | - | - | 888 | 3,124 | 0.11 | |||||||||||||||||||||||||||
| Manufacturing consolidation costs (5) | 3,993 | - | 3,993 | - | - | 485 | 3,508 | 0.12 | ||||||||||||||||||||||||||||
| $ | 476,955 | $ | 365,748 | $ | 70,734 | $ | 44,052 | $ | 355 | $ | (3,535 | ) | $ | 29,862 | $ | 1.02 | ||||||||||||||||||||
| Adjusted gross profit % | 55.3% | |||||||||||||||||||||||||||||||||||
| Amortization (6) | $ | 6,000 | (27,945 | ) | 33,945 | (13,414 | ) | - | 13,037 | 34,322 | 1.16 | |||||||||||||||||||||||||
| Adjusted net income | $ | 337,803 | $ | 104,679 | $ | 30,638 | $ | 355 | $ | 9,502 | 12.9% | $ | 64,184 | $ | 2.18 | |||||||||||||||||||||
| % of sales | 39.2% | 12.1% |
| Year Ended December 31, 2019 | ||||||||||||||||||||||||||||||||||||
| Gross Profit | Selling & Administrative Expense | Operating Income | Interest Expense | Other Expense | Tax Expense | Effective Tax Rate | Net Income | Diluted EPS | ||||||||||||||||||||||||||||
| As reported | $ | 524,715 | $ | 400,141 | $ | 79,114 | $ | 42,701 | $ | 5,188 | $ | 2,605 | 8.3% | $ | 28,620 | $ | 0.97 | |||||||||||||||||||
| % of sales | 54.9% | 41.9% | 8.3% | |||||||||||||||||||||||||||||||||
| Acquisition and integration costs (4) | 1,335 | (13,066 | ) | 14,401 | - | - | 3,609 | 10,792 | 0.37 | |||||||||||||||||||||||||||
| Manufacturing consolidation costs (5) | 2,858 | - | 2,858 | - | - | 354 | 2,504 | 0.08 | ||||||||||||||||||||||||||||
| Debt refinancing costs (7) | - | - | - | - | (3,904 | ) | 1,149 | 2,755 | 0.09 | |||||||||||||||||||||||||||
| $ | 528,908 | $ | 387,075 | $ | 96,373 | $ | 42,701 | $ | 1,284 | $ | 7,717 | $ | 44,671 | $ | 1.51 | |||||||||||||||||||||
| Adjusted gross profit % | 55.4% | |||||||||||||||||||||||||||||||||||
| Amortization (6) | $ | 6,000 | (26,075 | ) | 32,075 | (11,756 | ) | - | 10,590 | 33,241 | 1.13 | |||||||||||||||||||||||||
| Adjusted net income | $ | 361,000 | $ | 128,448 | $ | 30,945 | $ | 1,284 | $ | 18,307 | 19.0% | $ | 77,912 | $ | 2.64 | |||||||||||||||||||||
| % of sales | 37.8% | 13.4% |
(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.
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. The Company 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 our sales force.
(4) In 2020, the Company incurred inventory adjustments associated with a prior acquisition and severance and integration costs mainly related to the Buffalo Filter, LLC acquisition. In 2019, the Company incurred inventory adjustments, investment banking fees, consulting fees, legal fees, severance and integration related costs associated with the acquisition of Buffalo Filter, LLC.
(5) In 2020 and 2019, 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.
(6) Includes amortization of intangible assets, deferred financing fees and debt discount.
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
to EBITDA & Adjusted EBITDA
(in thousands, unaudited)
| Three Months Ended | Year Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Net income | $ | 24,140 | $ | 14,933 | $ | 9,517 | $ | 28,620 | ||||||||
| Provision (benefit) for income taxes | (10,642 | ) | 2,306 | (7,914 | ) | 2,605 | ||||||||||
| Interest expense | 11,114 | 10,319 | 44,052 | 42,701 | ||||||||||||
| Depreciation | 4,427 | 4,463 | 18,044 | 18,688 | ||||||||||||
| Amortization | 13,608 | 14,798 | 54,581 | 53,635 | ||||||||||||
| EBITDA | $ | 42,647 | $ | 46,819 | $ | 118,280 | $ | 146,249 | ||||||||
| Stock based compensation | 2,992 | 2,960 | 13,111 | 11,779 | ||||||||||||
| Plant underutilization costs | - | - | 6,586 | - | ||||||||||||
| Product rationalization costs | - | - | 4,264 | - | ||||||||||||
| Restructuring and related costs | 1,649 | - | 5,869 | - | ||||||||||||
| Acquisition and integration costs | 567 | 1,870 | 4,012 | 14,401 | ||||||||||||
| Manufacturing consolidation costs | - | 1,430 | 3,993 | 2,858 | ||||||||||||
| Debt refinancing costs | - | - | - | 3,904 | ||||||||||||
| Adjusted EBITDA | $ | 47,855 | $ | 53,079 | $ | 156,115 | $ | 179,191 | ||||||||
| EBITDA Margin | ||||||||||||||||
| EBITDA | 16.9% | 17.7% | 13.7% | 15.3% | ||||||||||||
| Adjusted EBITDA | 18.9% | 20.0% | 18.1% | 18.8% |
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; adjusted
interest expense; adjusted other expense; adjusted income tax expense (benefit); 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