CONMED Corporation (NYSE: CNMD) today announced financial
results for the first quarter ended March 31, 2021.
First Quarter 2021 Highlights
- Sales of $232.7 million increased 8.7% year over year as
reported and 7.2% in constant currency.
- Domestic revenue increased 4.3% year over year.
- International revenue increased 14.3% as reported year over
year and 10.8% in constant currency.
- Diluted net earnings per share (GAAP) were $0.31, an increase
of 55.0% over the first quarter of 2020.
- Adjusted diluted net earnings per share(1) were $0.63, an
increase of 23.5% over the first quarter of 2020.
“I am very pleased by our first-quarter performance, which is a
direct result of our team’s continued perseverance through a
difficult operating environment,” commented Curt R. Hartman,
CONMED’s Chair of the Board, President, and Chief Executive
Officer. “I believe that CONMED is well-positioned to capitalize on
an improving surgical landscape over the course of this year, and I
am confident in our team’s ability to provide innovative solutions
that will benefit both our customers and the patients in their
care.”
2021 Outlook
Based on the first quarter results, the Company is increasing
its guidance for full-year 2021 and now expects revenue between
$1.0 billion and $1.03 billion, compared to its prior guidance of
between $975 million and $1.02 billion. Based on recent exchange
rates, the positive impact to 2021 sales from foreign exchange is
now expected to be in the range of 50 to 100 basis.
The Company now expects full-year 2021 adjusted diluted net
earnings per share in the range of $3.05 to $3.20, compared to its
prior 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.
Conference Call
The Company’s management will host a conference call today at
4:30 p.m. ET to discuss its first quarter 2021 results.
To participate in the conference call, dial 1-844-889-7792
(domestic) or +1-661-378-9936 (international) and refer to the
passcode 1487002.
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 28, 2021, until 7:30 p.m. ET on Wednesday, May
5, 2021. To hear this recording, dial 1-855-859-2056 (domestic) or
+1-404-537-3406 (international) and enter the passcode 1487002.
Consolidated Condensed
Statements of Income
(in thousands, except per share
amounts, unaudited)
Three Months Ended
March 31,
2021
2020
Net sales
$
232,677
$
214,010
Cost of sales
104,228
94,851
Gross profit
128,449
119,159
% of sales
55.2
%
55.7
%
Selling & administrative expense
98,340
95,867
Research & development expense
10,027
10,120
Income from operations
20,082
13,172
% of sales
8.6
%
6.2
%
Interest expense
10,351
9,592
Other expense
-
89
Income before income taxes
9,731
3,491
Benefit from income taxes
(129
)
(2,436
)
Net income
$
9,860
$
5,927
Basic EPS
$
0.34
$
0.21
Diluted EPS
0.31
0.20
Basic shares
28,972
28,478
Diluted shares
31,378
29,707
Sales Summary
(in millions, unaudited)
Three Months Ended March
31,
% Change
Domestic
International
2021
2020
As Reported
Impact of Foreign
Currency
Constant Currency
As Reported
As Reported
Impact of Foreign
Currency
Constant Currency
Orthopedic Surgery
$
107.2
$
99.3
7.9
%
-2.0
%
5.9
%
0.2
%
12.5
%
-3.1
%
9.4
%
General Surgery
125.5
114.7
9.4
%
-1.2
%
8.2
%
6.1
%
17.6
%
-4.2
%
13.4
%
$
232.7
$
214.0
8.7
%
-1.5
%
7.2
%
4.3
%
14.3
%
-3.5
%
10.8
%
Single-use Products
$
187.4
$
177.7
5.5
%
-1.5
%
4.0
%
4.0
%
7.4
%
-3.3
%
4.1
%
Capital Products
45.3
36.3
24.7
%
-2.3
%
22.4
%
6.0
%
42.1
%
-4.4
%
37.7
%
$
232.7
$
214.0
8.7
%
-1.5
%
7.2
%
4.3
%
14.3
%
-3.5
%
10.8
%
Domestic
$
123.9
$
118.8
4.3
%
0.0
%
4.3
%
International
108.8
95.2
14.3
%
-3.5
%
10.8
%
$
232.7
$
214.0
8.7
%
-1.5
%
7.2
%
Reconciliation of Reported Net
Income to Adjusted Net Income
(in thousands, except per share
amounts, unaudited)
Three Months Ended March 31,
2021
Gross Profit
Selling &
Administrative
Expense
Operating
Income
Interest Expense
Tax Expense/
(Benefit)
Effective
Tax Rate
Net
Income
Diluted EPS
As reported
$
128,449
$
98,340
$
20,082
$
10,351
$
(129
)
-1.3
%
$
9,860
$
0.31
% of sales
55.2
%
42.3
%
8.6
%
Restructuring and related costs (1)
-
(414
)
414
-
109
305
0.02
$
128,449
$
97,926
$
20,496
$
10,351
$
(20
)
$
10,165
$
0.33
Adjusted gross profit %
55.2
%
Amortization(4)
$
1,500
(6,838
)
8,338
(3,561
)
2,969
8,930
0.30
Adjusted net income
$
91,088
$
28,834
$
6,790
$
2,949
13.4
%
$
19,095
$
0.63
% of sales
39.1
%
12.4
%
Diluted shares outstanding
30,193
Additional potential dilutive shares from
in-the-money convertible notes(5)
1,185
Diluted shares, as reported
31,378
Convertible note hedges(6)
(1,014
)
Diluted shares, as adjusted
30,364
Three Months Ended March 31,
2020
Gross Profit
Selling &
Administrative
Expense
Operating
Income
Interest Expense
Tax Expense/
(Benefit)
Effective
Tax Rate
Net
Income
Diluted EPS
As reported
$
119,159
$
95,867
$
13,172
$
9,592
$
(2,436
)
-69.8
%
$
5,927
$
0.20
% of sales
55.7
%
44.8
%
6.2
%
Acquisition and integration costs (2)
805
(754
)
1,559
-
604
955
0.03
Manufacturing consolidation costs (3)
1,785
-
1,785
-
693
1,092
0.04
$
121,749
$
95,113
$
16,516
$
9,592
$
(1,139
)
$
7,974
$
0.27
Adjusted gross profit %
56.9
%
Amortization(4)
$
1,500
(6,999
)
8,499
(3,084
)
4,494
7,089
0.24
Adjusted net income
$
88,114
$
25,015
$
6,508
$
3,355
18.2
%
$
15,063
$
0.51
% of sales
41.2
%
11.7
%
Diluted shares outstanding
29,572
Additional potential dilutive shares from
in-the-money convertible notes(5)
135
Diluted shares, as reported
29,707
Convertible note hedges(6)
(135
)
Diluted shares, as adjusted
29,572
(1) In 2021, 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 and
integration and severance costs mainly related to the acquisition
of Buffalo Filter, LLC.
(3) 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.
(4) Includes amortization of intangible
assets, deferred financing fees and debt discount.
(5) In Q1 2021 and 2020, the Company's
average share price exceeded the conversion price of our 2.625%
convertible notes due in 2024 (the "Notes") resulting in additional
potential diluted shares.
(6) 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 EBITDA & Adjusted EBITDA
(in thousands, unaudited)
Three Months Ended
March 31,
2021
2020
Net income
$
9,860
$
5,927
Benefit from income taxes
(129
)
(2,436
)
Interest expense
10,351
9,592
Depreciation
4,757
4,646
Amortization
13,519
13,776
EBITDA
$
38,358
$
31,505
Stock based compensation
3,387
3,032
Restructuring and related costs
414
-
Acquisition and integration costs
-
1,559
Manufacturing consolidation costs
-
1,785
Adjusted EBITDA
$
42,159
$
37,881
EBITDA Margin
EBITDA
16.5
%
14.7
%
Adjusted EBITDA
18.1
%
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 other healthcare
professionals in a variety of specialties, including orthopedics,
general surgery, gynecology, 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 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, 2020. 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
operating income; adjusted interest 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
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,
operating income, interest expense, income tax expense (benefit),
effective income tax rate, net income, diluted shares 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/20210428005914/en/
CONMED Corporation Todd Garner Chief Financial
Officer 727-214-2975 ToddGarner@conmed.com
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