C. R. Bard, Inc. (NYSE: BCR) today reported 2017 third quarter
financial results. The company has included supplemental financial
data on its website related to this earnings release. Third quarter
2017 net sales were $989.8 million, an increase of 5 percent
over the prior-year period on an as-reported basis. Excluding the
impact of foreign exchange, third quarter 2017 net sales also
increased 5 percent over the prior-year period.
During the third quarter of 2017, the company experienced two
issues that combined to reduce reported third quarter revenue by
approximately 1.5 percent. About half of this impact was related to
reduced sales as a result of the hurricane activity during the
quarter. The other half of the impact was related to a supply issue
with the company’s surgical sealant line.
For the third quarter 2017, net sales in the U.S. were $665.8
million, an increase of 3 percent over the prior-year period. Net
sales outside the U.S. were $324.0 million, an increase of 9
percent from the prior-year period on an as-reported basis.
Excluding the impact of foreign exchange, third quarter 2017 net
sales outside the U.S. increased 10 percent over the prior-year
period.
For the third quarter 2017, net income was $94.1 million and
diluted earnings per share were $1.25, both decreased 2 percent as
compared to third quarter 2016 results. Adjusting for amortization
of intangibles and certain items that affect the comparability of
results between periods, as detailed in the tables below, third
quarter 2017 net income was $227.9 million and diluted earnings per
share were $3.02, both increased 14 percent as compared to third
quarter 2016 results.
In conjunction with the third quarter results, the company is
providing an update on the status of its Puerto Rico manufacturing
operations. The company has accounted for all of its employees in
Puerto Rico and all are safe. The company’s facilities on the
island sustained minor damage that has since been repaired.
Manufacturing has recently resumed and is operating normally, but
under generator power at this time. The company expects the
disruption in manufacturing to have a negative impact on fourth
quarter revenue and operations, but expects this impact to be
temporary in nature and to be resolved by the end of 2017.
Timothy M. Ring, chairman and chief executive officer,
commented, “After over 110 years of operations, with 54 years as a
public company, we believe this to be our last quarterly report as
a stand-alone company, as we expect the merger with Becton,
Dickinson and Company (“BD”) to be completed before the next
reporting cycle. I want to thank our employees and directors for
their tireless work and commitment to excellence over the years. I
also want to thank our investors for their outstanding support. We
believe the merger with BD will create a unique combination that
will deliver meaningful benefits for customers and patients and
provide long-term shareholder returns.”
Also in conjunction with the third quarter results, the company
is increasing its 2017 reported revenue guidance and increasing its
adjusted diluted earnings per share guidance. For the full year
2017, net sales are forecasted to increase between 5.5 percent and
6 percent on an as-reported basis. The company is maintaining its
prior full-year constant currency revenue guidance. Full year 2017
diluted earnings per share, after adjusting for amortization of
intangibles and certain items that affect comparability between
periods are projected to be between $11.85 and $11.90, representing
growth between 15 percent and 16 percent compared to full year 2016
results.
C. R. Bard, Inc. (www.crbard.com), headquartered in
Murray Hill, NJ, is a leading multinational developer, manufacturer
and marketer of innovative, life-enhancing medical technologies in
the fields of vascular, urology, oncology and surgical specialty
products.
This press release contains financial measures that are not
calculated in accordance with United States generally accepted
accounting principles (GAAP). These non-GAAP measures are
reconciled to their most directly comparable GAAP measures in the
tables below and related notes.
Non-GAAP measures included in our guidance were not reconciled
to the appropriate GAAP financial measures because the GAAP
measures are not accessible on a forward-looking basis. Items that
impact our non-GAAP financial measures may include
acquisition-related items, asset impairments, litigation charges,
restructuring and productivity initiative costs, tax items and
amortization of certain intangible assets, such as in connection
with future acquisitions. These items cannot all be reasonably
predicted and may directly impact our non-GAAP net income and our
non-GAAP diluted earnings per share, although changes with respect
to certain of these items may offset other changes. In addition,
certain of these items are dependent on various factors.
Accordingly, a reconciliation of the non-GAAP financial measure
guidance to the corresponding GAAP measures is not available
without unreasonable effort.
This press release may contain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, which are based on management’s current expectations, the
accuracy of which is necessarily subject to risks and
uncertainties. These statements are not historical in nature and
use words such as “anticipate”, “estimate”, “expect”, “project”,
“intend”, “forecast”, “plan”, “believe”, and other words of similar
meaning in connection with any discussion of future operating or
financial performance. Many factors may cause actual results to
differ materially from anticipated results including product
developments, sales efforts, income tax matters, the outcomes of
contingencies such as legal proceedings, and other economic,
business, competitive and regulatory factors. The company
undertakes no obligation to update its forward-looking statements.
Please refer to the Cautionary Statement Regarding Forward-Looking
Information in our June 30, 2017 Form 10-Q for more detailed
information about these and other factors that may cause actual
results to differ materially from those expressed or implied.
C. R. Bard,
Inc. Consolidated Statements of Income (dollars and
shares in thousands except per share amounts, unaudited)
Quarter Ended Nine Months Ended September 30, September 30,
2017
2016
2017
2016
Net sales $ 989,800 $ 941,900 $ 2,908,300 $ 2,746,900 Costs
and expenses Cost of goods sold 379,200 352,200 1,094,700 1,023,600
Marketing, selling and administrative expense 281,200 272,600
853,900 821,700 Research and development expense 71,700 74,200
216,200 213,800 Interest expense 14,900 14,900 45,100 39,600 Other
(income) expense, net 127,400 115,800 212,700
185,400 Total costs and expenses 874,400
829,700 2,422,600 2,284,100 Income from
operations before income taxes 115,400 112,200
485,700 462,800 Income tax provision 21,300
15,800 73,800 91,000 Net income $
94,100 $ 96,400 $ 411,900 $ 371,800 Basic earnings per share
available to common shareholders $ 1.28 $ 1.30 $ 5.60 $ 5.00
Diluted earnings per share available to common shareholders $ 1.25
$ 1.27 $ 5.47 $ 4.92 Wt. avg. common shares outstanding -
basic 73,400 74,100 73,200 74,000 Wt. avg. common and common
equivalent shares outstanding - diluted 75,100 75,300 74,900 75,200
Product Group Summary of Net Sales (dollars in
thousands, unaudited)
Quarter Ended September 30, Nine Months Ended
September 30, Constant Constant 2017 2016 Change Currency 2017 2016
Change Currency Vascular $ 289,200 $ 258,100 12 % 12 % $ 823,400 $
752,900 9 % 10 % Urology 248,400 242,100 3 % 3 % 727,400 698,800 4
% 5 % Oncology 270,500 258,400 5 % 5 % 792,500 752,700 5 % 6 %
Surgical Specialties 157,700 158,800 -1 % -1 % 492,500 470,100 5 %
5 % Other 24,000 24,500 -2 % -1 %
72,500 72,400 0 % 2 % Net sales $ 989,800 $
941,900 5 % $ 2,908,300 $ 2,746,900 6 %
Foreign exchange impact (1,600 )
(19,700 ) Constant Currency $ 989,800 $ 940,300 5 % $
2,908,300 $ 2,727,200 7 %
Non-GAAP
Reconciliation of Earnings (dollars in millions except per
share amounts, unaudited)
Quarter Ended September 30, 2017 Diluted Earnings Marketing,
per Share Cost of Selling and Research & Other Available Goods
Administrative Development (Income) Income Net to Common Sold
Expense Expense Expense, Net Taxes Income Shareholders GAAP
Basis $ 379.2 $ 281.2 $ 71.7 $ 127.4 $ 21.3 $ 94.1 $ 1.25
Amortization of intangible assets
(32.7 ) - - - 11.2 21.5
Items that affect
comparability of
results between
periods:
Hurricane-related charges (11.4 ) - - - 0.3 11.1
Acquisition-related items (0.2 ) (0.8 ) (0.3 ) 0.6 0.2 0.5
Litigation charges - - - (115.7 ) 24.1 91.6
BD transaction costs
- - - (11.4 ) 2.1 9.3 Restructuring and productivity initiative
costs - - - (0.4 )
0.6 (0.2 ) Total (44.3 ) (0.8 ) (0.3 )
(126.9 ) 38.5 133.8 1.77
Adjusted Basis $ 334.9 $ 280.4 $ 71.4 $
0.5 $ 59.8 $ 227.9 $ 3.02
Quarter Ended September 30, 2016 Diluted Earnings Marketing, per
Share Cost of Selling and Research & Other Available Goods
Administrative Development (Income) Income Net to Common Sold
Expense Expense Expense, Net Taxes Income Shareholders(1)
GAAP Basis $ 352.2 $ 272.6 $ 74.2 $ 115.8 $ 15.8 $ 96.4 $ 1.27
Amortization of intangible assets (32.7 ) - - - 11.1 21.6
Items that affect
comparability of
results between
periods:
Acquisition-related items (1.9 ) (2.6 ) (0.3 ) (0.2 ) 1.5 3.5
Litigation charges - - - (110.6 ) 33.1 77.5 Restructuring and
productivity initiative costs - - - (4.6 ) 1.5 3.1 Tax item
- - - - 2.6
(2.6 ) Total (34.6 ) (2.6 ) (0.3 ) (115.4 )
49.8 103.1 1.36
Adjusted Basis $ 317.6 $ 270.0 $ 73.9 $ 0.4
$ 65.6 $ 199.5 $ 2.64 Nine
Months Ended September 30, 2017 Diluted Earnings Marketing, per
Share Cost of Selling and Research & Other Available Goods
Administrative Development (Income) Income Net to Common Sold
Expense Expense Expense, Net Taxes Income Shareholders GAAP
Basis $ 1,094.7 $ 853.9 $ 216.2 $ 212.7 $ 73.8 $ 411.9 $ 5.47
Amortization of intangible assets (97.2 ) - - - 33.3 63.9
Items that affect
comparability of
results between
periods:
Hurricane-related charges (11.4 ) - - - 0.3 11.1
Acquisition-related items (0.4 ) (5.4 ) (1.9 ) 1.0 1.7 5.0
Litigation charges - - - (194.0 ) 40.0 154.0 BD transaction costs -
- - (18.0 ) 2.6 15.4 Restructuring and productivity initiative
costs - - - (5.6 ) 2.7 2.9 Gore proceeds - -
- 2.4 (0.9 ) (1.5
) Total (109.0 ) (5.4 ) (1.9 ) (214.2 ) 79.7 250.8 3.33
Adjusted Basis $
985.7 $ 848.5 $ 214.3 $ (1.5 ) $ 153.5
$ 662.7 $ 8.80 Nine Months Ended September 30,
2016 Diluted Earnings Marketing, per Share Cost of Selling and
Research & Other Available Goods Administrative Development
(Income) Income Net to Common Sold Expense Expense Expense, Net
Taxes Income Shareholders GAAP Basis $ 1,023.6 $ 821.7 $
213.8 $ 185.4 $ 91.0 $ 371.8 $ 4.92 Amortization of intangible
assets (97.9 ) - - - 33.2 64.7
Items that affect
comparability of
results between
periods:
Acquisition-related items 0.7 (8.7 ) (2.2 ) (3.2 ) 5.6 7.8 Asset
impairment (1.2 ) - - - - 1.2 Litigation charges - - - (159.5 )
51.2 108.3 Restructuring and productivity initiative costs - - -
(26.3 ) 8.8 17.5 Tax item - - -
- 2.6 (2.6 ) Total
(98.4 ) (8.7 ) (2.2 ) (189.0 ) 101.4 196.9 2.61
Adjusted Basis $ 925.2 $
813.0 $ 211.6 $ (3.6 ) $ 192.4 $ 568.7
$ 7.53 (1) Total per share amounts do not add due to
rounding.
Notes to Non-GAAP
Reconciliation of Earnings
- For the third quarter 2017,
amortization of intangible assets was $32.7 million pre-tax and the
following items affected the comparability of results between
periods: (i) charges of $11.4 million pre-tax for hurricane-related
costs incurred in facilities in Puerto Rico; (ii) net charges of
$0.7 million pre-tax from acquisition-related items including
transaction costs, purchase accounting adjustments and integration
costs; (iii) charges of $115.7 million pre-tax related to estimated
costs for product liability matters and litigation-related defense
costs in connection with the District Court’s pre-trial orders that
the company prepare additional individual cases for trial (the “WHP
Pre-Trial Orders”); (iv) charges of $11.4 million pre-tax for
transaction costs related to the Agreement and Plan of Merger (the
“Merger Agreement”) with Becton, Dickinson and Company (“BD”); and
(v) net charges of $0.4 million pre-tax for restructuring and
productivity initiatives. The net effect of these items decreased
net income by $133.8 million, or $1.77 diluted earnings per share
available to common shareholders.
- For the third quarter 2016,
amortization of intangible assets was $32.7 million pre-tax and the
following items affected the comparability of results between
periods: (i) charges of $5.0 million pre-tax from
acquisition-related items including transaction costs, purchase
accounting adjustments and integration costs; (ii) charges of
$110.6 million pre-tax related to estimated costs for product
liability matters; (iii) charges of $4.6 million pre-tax for
restructuring and productivity initiatives; and (iv) a decrease of
$2.6 million in the income tax provision as a result of the
completion of certain IRS examinations. The net effect of these
items decreased net income by $103.1 million, or $1.36 diluted
earnings per share available to common shareholders.
- For the nine months ended September 30,
2017, amortization of intangible assets was $97.2 million pre-tax
and the following items affected the comparability of results
between periods: (i) charges of $11.4 million pre-tax for
hurricane-related costs incurred in facilities in Puerto Rico; (ii)
net charges of $6.7 million pre-tax from acquisition-related items
including purchased research and development, transaction costs,
purchase accounting adjustments and integration costs; (iii)
charges of $194.0 million pre-tax related to estimated costs for
product liability matters, litigation-related defense costs in
connection with the WHP Pre-Trial Orders, and for Civil
Investigative Demands received from a number of State Attorneys
General (the “AG Matter”); (iv) charges of $18.0 million pre-tax
for transaction costs related to the Merger Agreement with BD; (v)
net charges of $5.6 million pre-tax for restructuring and
productivity initiatives; and (vi) a gain of $2.4 million pre-tax
related to an agreement to settle the dispute and end the
litigation with Gore. The net effect of these items decreased net
income by $250.8 million, or $3.33 diluted earnings per share
available to common shareholders.
- For the nine months ended September 30,
2016, amortization of intangible assets was $97.9 million pre-tax
and the following items affected the comparability of results
between periods: (i) net charges of $13.4 million pre-tax from
acquisition-related items including transaction costs, purchase
accounting adjustments and integration costs; (ii) a charge of $1.2
million pre-tax related to an asset impairment; (iii) charges of
$159.5 million pre-tax related to estimated costs for product
liability matters; (iv) charges of $26.3 million pre-tax for
restructuring and productivity initiatives; and (v) a decrease of
$2.6 million in the income tax provision as a result of the
completion of certain IRS examinations. The net effect of these
items decreased net income by $196.9 million, or $2.61 diluted
earnings per share available to common shareholders.
------------------------------------------------------------------------
This press release includes net sales excluding the impact of
foreign exchange. The company analyzes net sales on a constant
currency basis to better measure the comparability of results
between periods. Because changes in foreign currency exchange rates
have a non-operating impact on net sales, the company believes that
evaluating growth in net sales on a constant currency basis
provides an additional and meaningful assessment of net sales to
both management and the company’s investors.
In addition, this press release includes the following non-GAAP
measures: (1) cost of goods sold excluding the impact of
amortization of intangible assets, hurricane-related costs,
acquisition-related items and an asset impairment; (2) marketing,
selling and administrative expense excluding the impact of
acquisition-related items; (3) research and development expense
excluding the impact of acquisition-related items; (4) other
(income) expense, net, excluding the impact of acquisition-related
items, litigation charges (which includes product liability
matters, litigation-related defense costs in connection with the
WHP Pre-Trial Orders, and for the AG Matter), BD transaction costs,
restructuring and productivity initiative costs and Gore proceeds;
(5) the tax effect of the items set forth in (1) through (4) above;
(6) net income excluding the items set forth in (1) through (5)
above; and (7) diluted earnings per share available to common
shareholders excluding the items set forth in (1) through (5)
above.
The company excluded the items described above because they may
cause certain statements of operations categories not to be
indicative of ongoing operating results, and therefore affect the
comparability of results between periods. The company therefore
believes that these non-GAAP measures provide an additional and
meaningful assessment of the company’s ongoing operating
performance. Because the company has historically reported non-GAAP
results to the investment community, management also believes that
the inclusion of these non-GAAP measures provides consistency in
its financial reporting and facilitates investors’ understanding of
the company’s historic operating trends by providing an additional
basis for comparisons to prior periods. Management uses these
non-GAAP measures: (1) to establish financial and operational
goals; (2) to monitor the company’s actual performance in relation
to its business plan and operating budgets; (3) to evaluate the
company’s core operating performance and understand key trends
within the business; and (4) as part of several components it
considers in determining incentive compensation.
Management recognizes that the use of these non-GAAP measures
has limitations, including the fact that they may not be comparable
with similar non-GAAP measures used by other companies and that
management must exercise judgment in determining which types of
charges or other items should be excluded from the non-GAAP
information. Management compensates for these limitations by
providing full disclosure of each non-GAAP measure and a
reconciliation to the most directly comparable GAAP measure. All
non-GAAP measures are intended to supplement the applicable GAAP
disclosures and should not be considered in isolation from, or as a
replacement for, financial information prepared in accordance with
GAAP. For a reconciliation of these non-GAAP measures to the most
comparable GAAP measures, please see the above tables.
Notes to Non-GAAP Reconciliation of
Earnings per Share
(dollars and shares in thousands, except
per share amounts, unaudited)
Quarter Ended Nine
Months Ended September 30, September 30, 2017 2016 2017
2016 Earnings per Share Numerator: GAAP Basis - basic and
diluted Net income $ 94,100 $ 96,400 $ 411,900 $ 371,800 Less:
Income allocated to participating securities (1) 500
400 2,200 1,800 Net income available to common
shareholders $ 93,600 $ 96,000 $ 409,700 $ 370,000 Earnings
per Share Numerator: Adjusted Earnings Net income $ 227,900 $
199,500 $ 662,700 $ 568,700 Less: Income allocated to participating
securities (1) 1,100 1,000 3,400 2,800
Net income available to common shareholders $ 226,800 $ 198,500 $
659,300 $ 565,900 Earnings per Share Denominator: Wt. avg.
common shares outstanding - basic 73,400 74,100 73,200 74,000 Wt.
avg. common and common equivalent shares outstanding - diluted
75,100 75,300 74,900 75,200 Earnings per Share: GAAP Basis
Basic earnings per share available to common shareholders $ 1.28 $
1.30 $ 5.60 $ 5.00 Diluted earnings per share available to common
shareholders $ 1.25 $ 1.27 $ 5.47 $ 4.92 Earnings per Share:
Adjusted Earnings Diluted earnings per share available to common
shareholders $ 3.02 $ 2.64 $ 8.80 $ 7.53 (1) Basic and
diluted earnings per share available to common shareholders is
calculated using a numerator, which represents the total of income
less income allocated to participating securities.
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version on businesswire.com: http://www.businesswire.com/news/home/20171025006118/en/
C. R. Bard, Inc.Investor Relations:Todd W.
Garner, 908-277-8065Vice President, Investor
RelationsorMedia Relations:Scott T. Lowry,
908-277-8365Vice President and Treasurer
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