CONMED Corporation (Nasdaq: CNMD) today announced
financial results for the first quarter of 2019.
First Quarter 2019 Highlights
- Sales of $218.4 million increased 8.1%
year over year as reported and 9.3% in constant currency.
Acquisitions contributed approximately 300 basis points of
growth.
- Domestic revenue increased 10.1% year
over year.
- International revenue increased 5.8% as
reported and 8.3% in constant currency.
- Diluted net earnings per share (GAAP)
were $0.04, compared to diluted net earnings per share of $0.37 in
the first quarter of 2018.
- Adjusted diluted net earnings per
share(1) were $0.57 versus $0.53 in the first quarter of 2018, an
increase of 7.5%.
- Closed Buffalo Filter transaction on
February 11, 2019.
“We are pleased to report continued strength and momentum in the
business this quarter,” commented Curt R. Hartman, CONMED’s
President and Chief Executive Officer. “Our expanding new product
pipeline, combined with our solid execution during the first
quarter, positions us well to deliver on our increased expectations
for 2019.”
2019 Outlook
The Company is increasing its full-year 2019 financial guidance.
The Company now expects full-year 2019 reported sales growth in the
range of 9% to 10%, which includes an increase to its organic
constant currency sales growth to a range of 5.25% to 6.25% from
the original range of 5% to 6%, as well as the addition of the
Buffalo Filter acquisition. Based on recent exchange rates, the
negative impact to 2019 sales from foreign exchange is now expected
to be approximately 75 basis points, a reduction from the original
estimate of 100 basis points.
The Company is also increasing its guidance for adjusted diluted
net earnings per share to the range of $2.47 to $2.52 from the
original range of $2.42 to $2.47. This represents growth over 2018
of approximately 13% to 16%. 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 $34 to $36 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.
Conference Call
The Company’s management will host a conference call today at
4:30 p.m. ET to discuss its first quarter 2019 results.
To participate in the conference call, dial 844-889-7792
(domestic) or 661-378-9936 (international) and refer to the
passcode 9275258.
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, April 24, 2019, until 7:30 p.m. ET on Thursday, May
9, 2019. To hear this recording, dial 855-859-2056 (domestic) or
404-537-3406 (international) and enter the passcode 9275258.
Consolidated Condensed Statements of
Income
(in thousands, except per share amounts,
unaudited)
Three Months Ended March 31, 2019
2018 Net sales $
218,378 $ 202,064 Cost of sales 96,940
92,507 Gross profit 121,438
109,557 % of sales 55.6% 54.2% Selling and administrative
expense 99,226 84,568 Research & development expense
10,575 7,711 Income from operations
11,637 17,278 % of sales 5.3%
8.6% Interest expense 9,369 4,818 Other expense 4,225
- Income (loss) before income taxes (1,957)
12,460 Provision (benefit) for income taxes (2,978)
1,803 Net income $ 1,021
$ 10,657 Basic EPS $ 0.04 $ 0.38 Diluted EPS 0.04 0.37
Basic shares 28,173 28,008 Diluted shares 29,034 28,573
Sales Summary
(in millions, unaudited)
Three Months Ended March 31, %
Change Domestic
International Impact of Impact of
As Foreign Constant
As
Foreign Constant 2019 2018
Reported Currency Currency
Reported
As Reported Currency Currency
Orthopedic Surgery $ 113.4 $ 108.9 4.2% 1.5% 5.7% 4.9% 3.8% 2.4%
6.2% General Surgery 105.0 93.2 12.6% 0.8%
13.4% 13.7% 10.2% 2.6% 12.8% $ 218.4 $ 202.1
8.1% 1.2% 9.3% 10.1% 5.8% 2.5% 8.3%
Single-use Products $ 172.4 $ 161.7 6.6% 1.2% 7.8% 11.3%
1.3% 2.5% 3.8% Capital Products 46.0 40.4 13.9% 1.4%
15.3% 5.3% 22.6% 2.8% 25.4% $ 218.4 $
202.1 8.1% 1.2% 9.3% 10.1% 5.8% 2.5%
8.3% Domestic $ 117.0 $ 106.3 10.1% 0.0% 10.1% International
101.4 95.8 5.8% 2.5% 8.3% $ 218.4 $
202.1 8.1% 1.2% 9.3%
Reconciliation
of Reported Net Income to Adjusted Net Income
(in thousands, except per share amounts,
unaudited)
Three Months Ended March 31, 2019 Selling
& Tax
Administrative Operating Interest
Other Expense/ Effective
Diluted
Gross Profit Expense Income
Expense Expense (Benefit)
Tax Rate Net Income
EPS
As reported $ 121,438 $ 99,226 $ 11,637
$ 9,369 $ 4,225 $ (2,978) 152.2% $
1,021 $ 0.04 % of sales 55.6% 45.4% 5.3% Business
acquisition costs (1) 660 (7,245) 7,905 - - 2,327 5,578 0.19 Debt
refinancing costs (2) - - -
- (3,904) 1,149
2,755 0.09 $ 122,098 $ 91,981 $
19,542 $ 9,369 $ 321 $ 498 $ 9,354 $ 0.32 Gross profit % 55.9%
Amortization(3) $ 1,500 (5,829) 7,329
(2,207) - 2,408
7,128 0.25
Adjusted net income $
86,152 $ 26,871 $ 7,162 $ 321 $ 2,906
15.0% $ 16,482 $ 0.57 % of sales 39.5% 12.3%
Three Months Ended March 31, 2018 Selling
& Tax Administrative Operating
Interest Other Expense/ Effective
Diluted
Gross Profit Expense Income
Expense Expense (Benefit)
Tax Rate Net Income
EPS
As reported $ 109,557 $ 84,568 $ 17,278
$ 4,818 $ - $ 1,803 14.5% $ 10,657
$ 0.37 % of sales 54.2% 41.9% 8.6% Tax reform (4) -
- - - -
(301) 301
0.01 $ 109,557 $ 84,568 $ 17,278 $ 4,818 $ - $ 1,502 $ 10,958 $
0.38 Adjusted gross profit % 54.2% Amortization(3) $ 1,500
(4,021) 5,521 - -
1,353 4,168 0.15
Adjusted net income $ 80,547 $ 22,799 $ 4,818
$ - $ 2,855 15.9% $ 15,126 $
0.53 % of sales 39.9% 11.3% (1) In 2019, the Company
incurred investment banking fees, consulting fees, legal fees 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. (4) 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 EBITDA
& Adjusted EBITDA
(in thousands, unaudited)
Three Months Ended March 31, 2019
2018 Net income $ 1,021 $ 10,657
Provision (benefit) for income taxes (2,978) 1,803 Interest expense
9,369 4,818 Depreciation 4,442 4,502 Amortization 12,208
10,488 EBITDA $ 24,062 $ 32,268 Stock
based compensation 2,703 2,303 Business acquisition costs 7,905 -
Debt refinancing costs 3,904 - Adjusted EBITDA
$ 38,574 $ 34,571
EBITDA Margin EBITDA
11.0% 16.0% Adjusted EBITDA 17.7% 17.1%
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 measures.
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. 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.
Because non-GAAP 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 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190424006022/en/
CONMED CorporationTodd GarnerChief Financial
Officer315-624-3317ToddGarner@conmed.com
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