CONMED Corporation (NYSE: CNMD) today announced financial
results for the second quarter ended June 30, 2021.
Second Quarter 2021 Highlights
- Sales of $255.2 million increased 61.7% year over year as
reported and 58.2% in constant currency.
- Domestic revenue increased 64.2% year over year.
- International revenue increased 58.6% year over year as
reported and 50.7% in constant currency.
- Diluted net earnings per share (GAAP) were $0.41, compared to a
diluted net loss per share of $0.96 during the second quarter of
2020.
- Adjusted diluted net earnings per share(1) were $0.71, compared
to an adjusted diluted net loss per share of $0.07 during the
second quarter of 2020.
“Our solid second quarter results, driven by the strong
commitment and exceptional performance of our global team, have
positioned us well as we continue to navigate the COVID-19
environment and its impacts on our business,” commented Curt R.
Hartman, CONMED’s Chair of the Board, President, and Chief
Executive Officer. “Our focus remains on new product innovation and
strategically investing in our commercial and operations teams to
better serve our global customers and drive shareholder value.”
2021 Outlook
Based on its first six-month results, the Company is increasing
its guidance for the full year 2021 and now expects revenue between
$1.015 billion and $1.035 billion, compared to its prior guidance
of between $1.0 billion and $1.03 billion. Based on recent exchange
rates, the Company continues to expect the positive impact to 2021
sales from foreign exchange in the range of 50 to 100 basis
points.
The Company now expects full-year 2021 adjusted diluted net
earnings per share in the range of $3.15 to $3.25, compared to its
prior range of $3.05 to $3.20.
Supplemental Financial Disclosures
(1) A reconciliation of reported diluted net earnings (loss) per
share to adjusted diluted net earnings (loss) 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 second 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 7138188.
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, July 28, 2021, until 7:30 p.m. ET on Wednesday,
August 4, 2021. To hear this recording, dial 1-855-859-2056
(domestic) or +1-404-537-3406 (international) and enter the
passcode 7138188.
Consolidated Condensed
Statements of Income (Loss)
(in thousands, except per share
amounts, unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2021
2020
2021
2020
Net sales
$
255,161
$
157,785
$
487,837
$
371,796
Cost of sales
113,737
85,856
217,964
180,707
Gross profit
141,424
71,929
269,873
191,089
% of sales
55.4
%
45.6
%
55.3
%
51.4
%
Selling & administrative expense
104,399
84,475
202,739
180,343
Research & development expense
11,318
8,700
21,344
18,820
Income (loss) from operations
25,707
(21,246
)
45,790
(8,074
)
% of sales
10.1
%
-13.5
%
9.4
%
-2.2
%
Interest expense
9,420
11,401
19,772
20,993
Other expense
-
89
-
178
Income (loss) before income taxes
16,287
(32,736
)
26,018
(29,245
)
Provision (benefit) for income taxes
2,997
(5,336
)
2,868
(7,772
)
Net income (loss)
$
13,290
$
(27,400
)
$
23,150
$
(21,473
)
Basic EPS
$
0.46
$
(0.96
)
$
0.80
$
(0.75
)
Diluted EPS
0.41
(0.96
)
0.72
(0.75
)
Basic shares
29,125
28,542
29,052
28,506
Diluted shares
32,464
28,542
31,964
28,506
Sales Summary
(in millions, unaudited)
Three Months Ended June
30,
% 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
$ 107.9
$ 60.5
78.4%
-5.5%
72.9%
90.7%
71.7%
-8.6%
63.1%
General Surgery
147.3
97.3
51.4%
-2.3%
49.1%
55.7%
42.2%
-7.0%
35.2%
$ 255.2
$ 157.8
61.7%
-3.5%
58.2%
64.2%
58.6%
-7.9%
50.7%
Single-use Products
$ 208.9
$ 128.5
62.6%
-3.6%
59.0%
55.8%
72.7%
-8.8%
63.9%
Capital Products
46.3
29.3
58.0%
-3.4%
54.6%
126.6%
19.9%
-5.4%
14.5%
$ 255.2
$ 157.8
61.7%
-3.5%
58.2%
64.2%
58.6%
-7.9%
50.7%
Domestic
$ 143.6
$ 87.4
64.2%
0.0%
64.2%
International
111.6
70.4
58.6%
-7.9%
50.7%
$ 255.2
$ 157.8
61.7%
-3.5%
58.2%
Six Months Ended June
30,
% 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
$ 215.0
$ 159.8
34.6%
-3.3%
31.3%
33.3%
35.3%
-5.1%
30.2%
General Surgery
272.8
212.0
28.7%
-1.7%
27.0%
28.3%
29.6%
-5.5%
24.1%
$ 487.8
$ 371.8
31.2%
-2.3%
28.9%
29.7%
33.1%
-5.3%
27.8%
Single-use Products
$ 396.3
$ 306.2
29.4%
-2.2%
27.2%
26.3%
33.7%
-5.4%
28.3%
Capital Products
91.5
65.6
39.6%
-2.8%
36.8%
51.1%
31.0%
-4.9%
26.1%
$ 487.8
$ 371.8
31.2%
-2.3%
28.9%
29.7%
33.1%
-5.3%
27.8%
Domestic
$ 267.5
$ 206.3
29.7%
0.0%
29.7%
International
220.3
165.5
33.1%
-5.3%
27.8%
$ 487.8
$ 371.8
31.2%
-2.3%
28.9%
Reconciliation of Reported Net
Income (Loss) to Adjusted Net Income (Loss)
(in thousands, except per share
amounts, unaudited)
Three Months Ended June 30,
2021
Gross Profit
Selling & Administrative
Expense
Operating Income
Interest Expense
Tax Expense
Effective Tax Rate
Net Income
Diluted EPS
As reported
$
141,424
$
104,399
$
25,707
$
9,420
$
2,997
18.4
%
$
13,290
$
0.41
% of sales
55.4
%
40.9
%
10.1
%
$
141,424
$
104,399
$
25,707
$
9,420
$
2,997
$
13,290
Adjusted gross profit %
55.4
%
Amortization(6)
$
1,500
(6,689
)
8,189
(3,586
)
2,886
8,889
Adjusted net income
$
97,710
$
33,896
$
5,834
$
5,883
21.0
%
$
22,179
$
0.71
% of sales
38.3
%
13.3
%
Diluted shares outstanding
30,482
Additional potential dilutive shares from
in-the-money convertible notes(7)
1,982
Diluted shares, as reported
32,464
Convertible note hedges(8)
(1,362
)
Diluted shares, as adjusted
31,102
Three Months Ended June 30,
2020
Gross Profit
Selling & Administrative
Expense
Operating Income
(Loss)
Interest Expense
Tax Expense/ (Benefit)
Effective Tax Rate
Net Income (Loss)
Diluted EPS
As reported
$
71,929
$
84,475
$
(21,246
)
$
11,401
$
(5,336
)
16.3
%
$
(27,400
)
$
(0.96
)
% of sales
45.6
%
53.5
%
-13.5
%
Plant utilization costs (1)
6,586
-
6,586
-
739
5,847
Product rationalization costs (2)
2,169
(2,095
)
4,264
-
460
3,804
Restructuring and related costs (3)
1,087
(2,124
)
3,211
-
346
2,865
Manufacturing consolidation costs (4)
1,602
-
1,602
-
144
1,458
Acquisition and integration costs (5)
652
(439
)
1,091
-
119
972
$
84,025
$
79,817
$
(4,492
)
$
11,401
$
(3,528
)
$
(12,454
)
Adjusted gross profit %
53.3
%
Amortization(6)
$
1,500
(6,955
)
8,455
(3,413
)
1,280
10,588
Adjusted net income (loss)
$
72,862
$
3,963
$
7,988
$
(2,248
)
54.6
%
$
(1,866
)
$
(0.07
)
% of sales
46.2
%
2.5
%
(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.
(2) In 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 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.
(5) 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.
(6) Includes amortization of intangible
assets, deferred financing fees and debt discount.
(7) In 2021, 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.
(8) 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 (Loss)
to Adjusted Net Income
(in thousands, except per share amounts,
unaudited)
Six Months Ended June 30,
2021
Gross Profit
Selling & Administrative
Expense
Operating Income
Interest Expense
Tax Expense
Effective Tax Rate
Net Income
Diluted EPS
As reported
$
269,873
$
202,739
$
45,790
$
19,772
$
2,868
11.0
%
$
23,150
$
0.72
% of sales
55.3
%
41.6
%
9.4
%
Restructuring and related costs (1)
-
(414
)
414
-
109
305
$
269,873
$
202,325
$
46,204
$
19,772
$
2,977
$
23,455
Adjusted gross profit %
55.3
%
Amortization(6)
$
3,000
(13,527
)
16,527
(7,147
)
5,855
17,819
Adjusted net income
$
188,798
$
62,731
$
12,625
$
8,832
17.6
%
$
41,274
$
1.34
% of sales
38.7
%
12.9
%
Diluted shares outstanding
30,352
Additional potential dilutive shares from
in-the-money convertible notes(7)
1,612
Diluted shares, as reported
31,964
Convertible note hedges(8)
(1,201
)
Diluted shares, as adjusted
30,763
Six Months Ended June 30,
2020
Gross Profit
Selling & Administrative
Expense
Operating Income
(Loss)
Interest Expense
Tax Expense/ (Benefit)
Effective Tax Rate
Net Income (Loss)
Diluted EPS
As reported
$
191,089
$
180,343
$
(8,074
)
$
20,993
$
(7,772
)
26.6
%
$
(21,473
)
$
(0.75
)
% of sales
51.4
%
48.5
%
-2.2
%
Plant utilization costs (2)
6,586
-
6,586
-
739
5,847
Product rationalization costs (3)
2,169
(2,095
)
4,264
-
460
3,804
Restructuring and related costs (1)
1,087
(2,124
)
3,211
-
346
2,865
Manufacturing consolidation costs (4)
3,387
-
3,387
-
837
2,550
Acquisition and integration costs (5)
1,457
(1,192
)
2,649
-
722
1,927
$
205,775
$
174,932
$
12,023
$
20,993
$
(4,668
)
$
(4,480
)
Adjusted gross profit %
55.3
%
Amortization(6)
$
3,000
(13,954
)
16,954
(6,497
)
5,775
17,676
Adjusted net income
$
160,978
$
28,977
$
14,496
$
1,107
7.7
%
$
13,196
$
0.46
% of sales
43.3
%
7.8
%
(1) In 2021, the Company incurred
restructuring costs related to restructuring of our sales force. 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.
(2) 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.
(3) In 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.
(4) 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.
(5) 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.
(6) Includes amortization of intangible
assets, deferred financing fees and debt discount.
(7) In 2021, 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.
(8) 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 (Loss) to EBITDA & Adjusted EBITDA
(in thousands, unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2021
2020
2021
2020
Net income (loss)
$
13,290
$
(27,400
)
$
23,150
$
(21,473
)
Provision (benefit) for income taxes
2,997
(5,336
)
2,868
(7,772
)
Interest expense
9,420
11,401
19,772
20,993
Depreciation
3,984
4,588
8,741
9,234
Amortization
13,797
13,616
27,316
27,392
EBITDA
$
43,488
$
(3,131
)
$
81,847
$
28,374
Stock based compensation
4,290
3,555
7,676
6,587
Plant underutilization costs
-
6,586
-
6,586
Product rationalization costs
-
4,264
-
4,264
Restructuring and related costs
-
3,211
414
3,211
Manufacturing consolidation costs
-
1,602
-
3,387
Acquisition and integration costs
-
1,091
-
2,649
Adjusted EBITDA
$
47,778
$
17,178
$
89,937
$
55,058
EBITDA Margin
EBITDA
17.0
%
-2.0
%
16.8
%
7.6
%
Adjusted EBITDA
18.7
%
10.9
%
18.4
%
14.8
%
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
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 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
operating income (loss); adjusted interest expense; adjusted income
tax expense (benefit); adjusted effective income tax rate; adjusted
net income (loss), adjusted diluted shares and adjusted diluted net
earnings (loss) 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 (loss), interest expense, income tax expense
(benefit), effective income tax rate, net income (loss), diluted
shares and diluted net earnings (loss) 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/20210728005846/en/
CONMED Corporation Todd W. Garner Chief
Financial Officer 727-214-2975
ToddGarner@conmed.com
CONMED (NYSE:CNMD)
Historical Stock Chart
From May 2024 to Jun 2024
CONMED (NYSE:CNMD)
Historical Stock Chart
From Jun 2023 to Jun 2024