Biomet, Inc. (NASDAQ:BMET) today reported record sales and earnings
results for its first quarter ended August 31, 2006. Net sales
increased 5% to $508,161,000. Operating income increased 2% to
$155,043,000 from $151,410,000, and on an adjusted basis increased
7% to $159,269,000. Net income increased 2% to $102,830,000 from
$100,299,000. and increased 6% on an adjusted basis to
$106,815,000. Diluted earnings per share increased 5% to $0.42 from
$0.40, and increased 10% on an adjusted basis to $0.44. Reported
earnings per share for the first quarter of fiscal year 2007
includes a $.02 per share impact related to SFAS 123(R) Share-Based
Payment. Effective June 1, 2006, the Company adopted this new
accounting standard using the modified-prospective method. In
accordance with this adoption method, the Company is not adjusting
its historical financial statements to reflect the impact of
share-based payment. Interim President and Chief Executive Officer
Daniel P. Hann stated, "The Company's record first quarter results
are attributable to continued strong sales of orthopedic
reconstructive devices and dental reconstructive implants. However,
sales of Biomet Trauma and Biomet Spine (formerly EBI) were
approximately $12 million below management's expectations for the
first quarter of fiscal year 2007. The Company has made numerous
changes at its Biomet Trauma and Biomet Spine subsidiary, including
the appointment of Chuck Niemier, former COO International
Operations, as president, and the appointments of a new vice
president of finance and vice president of sales. We are also
making significant progress with the implementation of a new
computer system, sales support systems, the in-sourcing of the
manufacture of spinal hardware products, and expanding the research
and development team. Additionally, since May 31, 2005, the Company
has eliminated over 330 positions at the former EBI operations. We
believe that the new management team and infrastructure changes at
Biomet Trauma and Biomet Spine will allow the Company to provide
greater focus on the spine and trauma markets and to our
customers." Excluding the impact of foreign currency, which
increased sales by $3 million, net sales increased 4%. First
quarter sales in the United States increased 3%, while
international sales increased 7%, on a constant currency basis.
During the first quarter of fiscal year 2007, worldwide
reconstructive device sales increased 9% to $351,737,000. Excluding
the effects of foreign currency, reconstructive device sales
increased 8% worldwide during the quarter. Knee sales increased 11%
worldwide and in the United States during the first quarter. On a
constant currency basis, knee sales increased 10% worldwide.
Revenue growth for knees during the first quarter continued to be
driven by strong demand for Biomet's recent product introductions
for total and unicompartmental knee replacement procedures. Hip
sales increased 8% worldwide and 3% in the United States during the
first quarter. Worldwide hip sales increased 7%, constant currency.
The Company's metal-on-metal acetabular systems, porous coated hip
stems and second generation highly crosslinked polyethylene
components experienced increased market penetration during the
first quarter. Extremity sales increased 13% worldwide and 8% in
the United States during the first quarter. Excluding the impact of
foreign currency, worldwide extremity sales increased 12% during
the quarter. Dental reconstructive implant sales increased 11%
worldwide and in the United States during the first quarter. On a
constant currency basis, worldwide dental reconstructive implants
sales increased 10%. Sales of bone cements and accessories
decreased 11% worldwide and increased 9% in the United States
during the first quarter. Sales of bone cements and accessories
decreased 12% worldwide, constant currency. Worldwide fixation
sales decreased 5% to $60,873,000 during the first quarter of
fiscal year 2007 and decreased 9% in the United States during the
first quarter. Internal fixation sales increased 1% worldwide and
decreased 10% in the United States during the first quarter.
Excluding the effects of foreign currency, internal fixation sales
increased 1% worldwide. Lorenz Surgical's craniomaxillofacial
fixation sales decreased 4% worldwide and decreased 5% in the
United States during the first quarter. Electrical stimulation
device sales decreased 8% worldwide and in the United States during
the first quarter. Worldwide external fixation sales decreased 11%
and decreased 16% in the United States during the quarter. On a
constant currency basis, worldwide external fixation sales
decreased 11%. During the first quarter of fiscal year 2007, spinal
product sales decreased 6% worldwide to $51,933,000, and decreased
7% in the United States. Spinal product sales decreased 7%
worldwide, on a constant currency basis. Sales of spinal implants
and orthobiologics for the spine decreased 4% worldwide and
decreased 5% in the United States during the first quarter. On a
constant currency basis, spinal implants and orthobiologics for the
spine decreased 5% worldwide during the first quarter. Spinal
stimulation sales decreased 9% worldwide and in the United States
during the first quarter. Worldwide sales of Biomet's "other
products" increased 5% to $43,618,000 during the first quarter of
fiscal year 2007 and increased 2% in the United States. Excluding
the effects of foreign currency, sales of "other products"
increased 4% worldwide. Softgoods and bracing sales increased 10%
worldwide and increased 11% in the United States during the first
quarter. Softgoods and bracing sales increased 10% worldwide,
constant currency. Arthroscopy sales increased 13% worldwide and
increased 6% in the United States during the first quarter. On a
constant currency basis, arthroscopy sales increased 12% worldwide.
Mr. Hann concluded, "We are pleased with Biomet's reconstructive
and dental reconstructive sales performance during the first
quarter of fiscal year 2007. As previously mentioned, the Company
is disappointed with the sales performance of its trauma and spinal
products in the United States. However, the Company is taking
aggressive, appropriate action to address the issues affecting its
trauma and spinal businesses and we expect to experience improved
sales performance and profitability at these businesses as we
progress through fiscal year 2007. We are comfortable with sales
and earnings estimates of $519 million to $540 million and $0.44 to
$0.46 per share for the second quarter of fiscal year 2007. This
guidance does not incorporate the effect of SFAS 123(R),
Share-Based Payment, which the Company estimates to be $0.01 to
$0.02 per share for the second quarter of fiscal year 2007."
Biomet, Inc. and its subsidiaries design, manufacture and market
products used primarily by musculoskeletal medical specialists in
both surgical and non-surgical therapy. The Company's product
portfolio encompasses reconstructive products, including orthopedic
joint replacement devices, bone cements and accessories, and dental
reconstructive implants; fixation products, including electrical
bone growth stimulators, internal and external orthopedic fixation
devices, craniomaxillofacial implants and bone substitute
materials; spinal products, including spinal stimulation devices,
spinal hardware and orthobiologics; and other products, such as
arthroscopy products and softgoods and bracing products.
Headquartered in Warsaw, Indiana, Biomet and its subsidiaries
currently distribute products in more than 100 countries. For
further information contact Greg W. Sasso, Senior Vice President,
Corporate Development and Communications at (574) 372-1528 or
Barbara Goslee, Manager, Corporate Communications at (574)
372-1514. This press release contains certain statements that are
"forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, as amended. Although the Company believes
that the assumptions, on which the forward-looking statements
contained herein are based, are reasonable, any of those
assumptions could prove to be inaccurate given the inherent
uncertainties as to the occurrence or non-occurrence of future
events. There can be no assurance that the forward-looking
statements contained in this press release will prove to be
accurate. Some of the factors that could cause actual results to
differ from those contained in forward-looking statements made in
this press release include the success of the Company's principal
product lines and reorganization efforts with respect to its EBI
operations, the Company's ability to develop and market new
products and technologies in a timely manner, government
regulation, currency exchange rate fluctuations, reimbursements
from third party payors, litigation, revenue and earnings
estimates, and other risk factors as set forth from time to time in
the Company's filings with the SEC. The inclusion of a
forward-looking statement herein should not be regarded as a
representation by the Company that the Company's objectives will be
achieved. The Company undertakes no obligation to publicly update
forward-looking statements, whether as a result of new information,
future events or otherwise. All of Biomet's financial information
may be obtained on our website at www.biomet.com or you may contact
us by e-mail at investor.relations@biometmail.com. All trademarks
are owned by Biomet, Inc., or one of its subsidiaries. -0- *T
Biomet, Inc. Results for the quarter ended August 31 (in thousands,
except per share data) Three Months Ended
--------------------------------- 2006 2005 ------------------
-------------- Net Sales $508,161 $484,903 Cost of Sales 138,747
134,495 ------------------ -------------- Gross Profit 369,414
350,408 S, G, & A 190,010 178,182 R & D 24,361 20,816
------------------ -------------- Operating Income 155,043 151,410
Other Income (Expense), Net 1,113 558 ------------------
-------------- Income Before Taxes 156,156 151,968 Income Taxes
53,326 51,669 ------------------ -------------- Net Income $102,830
$100,299 ================== ============== Earnings per Share Basic
.42 .40 Diluted .42 .40 Basic Shares Outstanding 244,881 249,582
Diluted Shares Outstanding 244,881 250,656 U.S. sales $325,947
$317,326 Foreign sales 182,214 167,577 Reconstructive sales
$351,737 $323,815 Fixation sales 60,873 64,179 Spinal product sales
51,933 55,326 Other product sales 43,618 41,583 Consolidated
Balance Sheets August 31, 2006 May 31, 2006 Assets Cash and
Investments $257,576 $225,471 Accounts and notes receivable, net
493,639 507,883 Inventories 560,410 534,515 Other current assets
106,955 105,687 Fixed Assets, net 363,550 357,632 Goodwill 442,118
441,397 Other Assets 93,592 91,337 ------------------
-------------- Total Assets $2,317,840 $2,263,922
================== ============== Liabilities and Stockholders'
Equity Current Liabilities $540,253 $520,432 Other Liabilities
28,971 26,991 Stockholders' Equity 1,748,616 1,716,499
------------------ -------------- Total Liabilities and
Stockholders' Equity $2,317,840 $2,263,922 ==================
============== *T Management uses non-GAAP financial measures, such
as net sales, excluding the impact of foreign currency, operating
income as adjusted, net income as adjusted, and diluted earning per
share as adjusted. The term "as adjusted", a non-GAAP financial
measure, refers to financial performance measures that exclude the
effect of share-based payments. The Company's management believes
that the presentation of these measures provides useful information
to investors. These measures may assist investors in evaluating the
Company's operations, period over period. Management uses these
measures internally for evaluation of the performance of the
business, including the allocation of resources and the evaluation
of results relative to team member performance compensation
targets. Investors should consider these non-GAAP measures only as
a supplement to, not as a substitute for or as superior to,
measures of financial performance prepared in accordance with GAAP.
-0- *T BIOMET, INC. Reconciliation of non-GAAP financial
information to GAAP financial information For the Three Months
Ended August 31, 2006 (in millions, unaudited) Operating income as
reported $155,043 Share-based payment 4,226 ----------- Operating
income, as adjusted, excluding the effects of share-based payments
159,269 =========== Net income, as reported $102,830 Share-based
payment, net of tax 3,985 ----------- Net income, as adjusted,
excluding the effects of share- based payments $106,815 ===========
Diluted EPS $0.42 Share-based payment, net of tax 0.02 -----------
Diluted EPS, as adjusted, excluding the effects of share- based
payments $0.44 =========== Current year sales growth as reported
and in local currencies is as follows: Sales Growth FX Sales Growth
in As Reported Impact Local Currencies Three Months
----------------- U.S. sales 3% 0% 3% Foreign sales 9 2 7 Total
sales 5 1 4 Reconstructive sales 9% 1% 8% Fixation sales (5) 0 (5)
Spinal product sales (6) 1 (7) Other product sales 5 1 4 *T
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