CONMED Corporation (NYSE: CNMD) today announced financial
results for the fourth quarter and full year ended December 31,
2021.
Fourth Quarter 2021 Highlights
- Sales of $274.0 million increased 8.4% year over year as
reported and 9.1% in constant currency.
- Domestic revenue increased 5.0% year over year.
- International revenue increased 12.7% year over year as
reported and 14.3% in constant currency.
- Diluted net earnings per share (GAAP) were $0.75, compared to
diluted net earnings per share of $0.81 during the fourth quarter
of 2020.
- Adjusted diluted net earnings per share(1) were $1.07, compared
to adjusted diluted net earnings per share of $0.84 during the
fourth quarter of 2020.
Full-Year 2021 Highlights
- Sales of $1.01 billion increased 17.2% year over year as
reported and 16.3% in constant currency.
- Domestic revenue increased 14.6% year over year.
- International revenue increased 20.4% year over year as
reported and 18.4% in constant currency.
- Diluted net earnings per share (GAAP) were $1.94, compared to
diluted net earnings per share of $0.32 in 2020.
- Adjusted diluted net earnings per share(1) were $3.21 versus
adjusted diluted net earnings per share of $2.18 in 2020.
“Our 2021 financial performance finished favorably against the
expectations we set at the beginning of the year despite the
challenging environment. I am proud that CONMED has exceeded $1
billion in annual revenue, and our team remains focused on
positioning the Company for long-term success,” commented Curt R.
Hartman, CONMED’s Chair of the Board, President, and Chief
Executive Officer.
2022 Outlook
The Company expects full-year 2022 revenue in the range of
$1.075 billion to $1.125 billion. Based on recent exchange rates,
the Company expects foreign exchange rates to be immaterial to
full-year 2022 revenue growth.
The Company expects full-year 2022 adjusted diluted net earnings
per share in the range of $3.60 to $3.85.
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 fourth quarter and full-year 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 5936618.
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, January 26, 2022, until 7:30 p.m. ET on Wednesday,
February 2, 2022. To hear this recording, dial 1-855-859-2056
(domestic) or +1-404-537-3406 (international) and enter the
passcode 5936618.
Consolidated Condensed
Statements of Income
(in thousands except per share
amounts, unaudited)
Three Months Ended
Year Ended
December 31,
December 31,
2021
2020
2021
2020
Net sales
$
273,971
$
252,828
$
1,010,635
$
862,459
Cost of sales
118,115
117,314
442,599
402,159
Gross profit
155,856
135,514
568,036
460,300
% of sales
56.9
%
53.6
%
56.2
%
53.4
%
Selling & administrative expense
107,279
99,097
414,754
373,817
Research & development expense
11,361
11,716
43,565
40,473
Income from operations
37,216
24,701
109,717
46,010
% of sales
13.6
%
9.8
%
10.9
%
5.3
%
Interest expense
7,569
11,114
35,485
44,052
Other expense
-
89
1,127
355
Income before income taxes
29,647
13,498
73,105
1,603
Provision (benefit) for income taxes
5,203
(10,642
)
10,563
(7,914
)
Net income
$
24,444
$
24,140
$
62,542
$
9,517
Basic EPS
$
0.83
$
0.84
$
2.14
$
0.33
Diluted EPS
0.75
0.81
1.94
0.32
Basic shares
29,349
28,745
29,162
28,581
Diluted shares
32,769
29,941
32,216
29,464
Sales Summary
(in millions, unaudited)
Three Months Ended December
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
$
117.6
$
112.7
4.3
%
0.9
%
5.2
%
0.7
%
6.5
%
1.4
%
7.9
%
General Surgery
156.4
140.1
11.6
%
0.6
%
12.2
%
6.8
%
23.4
%
1.9
%
25.3
%
$
274.0
$
252.8
8.4
%
0.7
%
9.1
%
5.0
%
12.7
%
1.6
%
14.3
%
Single-use Products
$
222.8
$
205.9
8.2
%
0.8
%
9.0
%
2.8
%
16.1
%
1.7
%
17.8
%
Capital Products
51.2
46.9
8.9
%
0.6
%
9.5
%
18.0
%
2.0
%
1.0
%
3.0
%
$
274.0
$
252.8
8.4
%
0.7
%
9.1
%
5.0
%
12.7
%
1.6
%
14.3
%
Domestic
$
148.6
$
141.6
5.0
%
0.0
%
5.0
%
International
125.4
111.2
12.7
%
1.6
%
14.3
%
$
274.0
$
252.8
8.4
%
0.7
%
9.1
%
Year Ended December
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
$
438.4
$
374.7
17.0
%
-1.3
%
15.7
%
13.5
%
19.1
%
-2.1
%
17.0
%
General Surgery
572.2
487.8
17.3
%
-0.6
%
16.7
%
15.1
%
22.6
%
-2.1
%
20.5
%
$
1,010.6
$
862.5
17.2
%
-0.9
%
16.3
%
14.6
%
20.4
%
-2.0
%
18.4
%
Single-use Products
$
820.1
$
703.0
16.7
%
-0.9
%
15.8
%
13.1
%
21.6
%
-2.0
%
19.6
%
Capital Products
190.5
159.5
19.5
%
-1.1
%
18.4
%
23.3
%
16.4
%
-2.1
%
14.3
%
$
1,010.6
$
862.5
17.2
%
-0.9
%
16.3
%
14.6
%
20.4
%
-2.0
%
18.4
%
Domestic
$
552.5
$
482.1
14.6
%
0.0
%
14.6
%
International
458.1
380.4
20.4
%
-2.0
%
18.4
%
$
1,010.6
$
862.5
17.2
%
-0.9
%
16.3
%
Reconciliation of Reported Net
Income to Adjusted Net Income
(in thousands, except per share
amounts, unaudited)
Three Months Ended December
31, 2021
Gross Profit
Selling & Administrative
Expense
Operating Income
Interest Expense
Tax Expense
Effective Tax Rate
Net Income
Diluted EPS
As reported
$
155,856
$
107,279
$
37,216
$
7,569
$
5,203
17.6
%
$
24,444
$
0.75
% of sales
56.9
%
39.2
%
13.6
%
Amortization(1)
$
1,500
(6,811
)
8,311
(3,386
)
2,744
8,953
Adjusted net income
$
100,468
$
45,527
$
4,183
$
7,947
19.2
%
$
33,397
$
1.07
% of sales
36.7
%
16.6
%
Diluted shares outstanding
30,594
Additional potential dilutive shares from
in-the-money convertible notes(4)
2,175
Diluted shares, as reported
32,769
Convertible note hedges(5)
(1,446
)
Diluted shares, as adjusted
31,323
Three Months Ended December
31, 2020
Gross Profit
Selling & Administrative
Expense
Operating Income
Interest Expense
Tax Expense/ (Benefit)
Effective Tax Rate
Net Income
Diluted EPS
As reported
$
135,514
$
99,097
$
24,701
$
11,114
$
(10,642
)
-78.8
%
$
24,140
$
0.81
% of sales
53.6
%
39.2
%
9.8
%
Restructuring and related costs (2)
-
(1,649
)
1,649
-
1,548
101
Acquisition and integration costs (3)
567
-
567
-
532
35
$
136,081
$
97,448
$
26,917
$
11,114
$
(8,562
)
$
24,276
Adjusted gross profit %
53.8
%
Amortization(1)
$
1,500
(6,998
)
8,498
(3,479
)
11,242
735
Adjusted net income
$
90,450
$
35,415
$
7,635
$
2,680
9.7
%
$
25,011
$
0.84
% of sales
35.8
%
14.0
%
Diluted shares outstanding
29,705
Additional potential dilutive shares from
in-the-money convertible notes(4)
236
Diluted shares, as reported
29,941
Convertible note hedges(5)
(236
)
Diluted shares, as adjusted
29,705
(1) Includes amortization of intangible
assets, deferred financing fees and debt discount.
(2) In 2020, the Company incurred
restructuring costs related to a restructuring of our sales
force.
(3) In 2020, the Company incurred
inventory adjustments associated with a prior acquisition.
(4) In 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.
(5) 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 Adjusted Net Income
(in thousands, except per share
amounts, unaudited)
Year Ended December 31,
2021
Gross Profit
Selling & Administrative
Expense
Operating Income
Interest Expense
Other Expense
Tax Expense
Effective Tax Rate
Net Income
Diluted EPS
As reported
$
568,036
$
414,754
$
109,717
$
35,485
$
1,127
$
10,563
14.4
%
$
62,542
$
1.94
% of sales
56.2
%
41.0
%
10.9
%
Restructuring and related costs (1)
-
(414
)
414
-
-
109
305
Debt refinancing costs (2)
-
-
-
-
(1,127
)
281
846
$
568,036
$
414,340
$
110,131
$
35,485
$
-
$
10,953
$
63,693
Adjusted gross profit %
56.2
%
Amortization(7)
$
6,000
(27,133
)
33,133
(13,943
)
-
11,394
35,682
Adjusted net income
$
387,207
$
143,264
$
21,542
$
-
$
22,347
18.4
%
$
99,375
$
3.21
% of sales
38.3
%
14.2
%
Diluted shares outstanding
30,437
Additional potential dilutive shares from
in-the-money convertible notes(8)
1,779
Diluted shares, as reported
32,216
Convertible note hedges(9)
(1,273
)
Diluted shares, as adjusted
30,943
Year Ended December 31,
2020
Gross Profit
Selling & Administrative
Expense
Operating Income
Interest Expense
Other Expense
Tax Expense/ (Benefit)
Effective Tax Rate
Net Income
Diluted EPS
As reported
$
460,300
$
373,817
$
46,010
$
44,052
$
355
$
(7,914
)
-493.9
%
$
9,517
$
0.32
% of sales
53.4
%
43.3
%
5.3
%
Plant underutilization costs (3)
6,586
-
6,586
-
-
739
5,847
Product rationalization costs (4)
2,169
(2,095
)
4,264
-
-
460
3,804
Restructuring and related costs (1)
1,087
(4,782
)
5,869
-
-
1,807
4,062
Acquisition and integration costs (5)
2,820
(1,192
)
4,012
-
-
888
3,124
Manufacturing consolidation costs (6)
3,993
-
3,993
-
-
485
3,508
$
476,955
$
365,748
$
70,734
$
44,052
$
355
$
(3,535
)
$
29,862
Adjusted gross profit %
55.3
%
Amortization(7)
$
6,000
(27,945
)
33,945
(13,414
)
-
13,037
34,322
Adjusted net income
$
337,803
$
104,679
$
30,638
$
355
$
9,502
12.9
%
$
64,184
$
2.18
% of sales
39.2
%
12.1
%
(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 2021, the Company incurred costs
related to a loss on early extinguishment and third party fees
associated with the seventh amended and restated senior credit
agreement.
(3) 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.
(4) 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.
(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) 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.
(7) Includes amortization of intangible
assets, deferred financing fees and debt discount.
(8) 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.
(9) 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
Year Ended
December 31,
December 31,
2021
2020
2021
2020
Net income
$
24,444
$
24,140
$
62,542
$
9,517
Provision (benefit) for income taxes
5,203
(10,642
)
10,563
(7,914
)
Interest expense
7,569
11,114
35,485
44,052
Depreciation
3,975
4,427
16,494
18,044
Amortization
13,502
13,608
54,249
54,581
EBITDA
$
54,693
$
42,647
$
179,333
$
118,280
Stock based compensation
4,332
2,992
16,335
13,111
Debt refinancing costs
-
-
1,127
-
Plant underutilization costs
-
-
-
6,586
Product rationalization costs
-
-
-
4,264
Restructuring and related costs
-
1,649
414
5,869
Acquisition and integration costs
-
567
-
4,012
Manufacturing consolidation costs
-
-
-
3,993
Adjusted EBITDA
$
59,025
$
47,855
$
197,209
$
156,115
EBITDA Margin
EBITDA
20.0
%
16.9
%
17.7
%
13.7
%
Adjusted EBITDA
21.5
%
18.9
%
19.5
%
18.1
%
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,
thoracic surgery, and gastroenterology. For more information, visit
www.conmed.com.
Forward-Looking Statements
This press release and the associated 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; adjusted interest expense; adjusted other
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, other 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/20220126005914/en/
CONMED Corporation Todd W. Garner Chief
Financial Officer 727-214-2975
ToddGarner@conmed.com
CONMED (NYSE:CNMD)
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