CONMED Corporation (NYSE: CNMD) today announced financial
results for the first quarter ended March 31, 2022.
First Quarter 2022 Highlights
- Sales of $242.3 million increased 4.1% year over year as
reported and 4.3% in constant currency.
- Domestic revenue increased 5.9% year over year.
- International revenue increased 2.2% year over year as reported
and 2.6% in constant currency.
- Diluted net earnings per share (GAAP) were $0.47, an increase
of 51.6% over the first quarter of 2021.
- Adjusted diluted net earnings per share(1) were $0.70, an
increase of 11.1% over the first quarter of 2021.
“I am pleased with our start to the year as we generated
momentum and finished the quarter on a strong note,” commented Curt
R. Hartman, CONMED’s Chair of the Board, President, and Chief
Executive Officer. “While we are facing larger than anticipated
inflationary pressures, we remain confident in our longer-term
prospects for both top and bottom-line growth.”
2022 Outlook
Based on the first quarter results, the Company is raising its
revenue guidance for the full year 2022 and now expects revenue
between $1.105 billion and $1.150 billion, compared to its prior
guidance of between $1.075 billion and $1.125 billion. Based on
recent exchange rates, the Company continues to expect foreign
exchange to be immaterial to full-year 2022 revenue growth. This
new guidance range includes approximately $20 million in revenue in
the back half of 2022 related to the acquisition of In2Bones
Global, Inc., announced today. The acquisition is subject to
customary closing conditions, including receipt of U.S. regulatory
approval.
The Company now expects full-year 2022 adjusted diluted net
earnings per share in the range of $3.50 to $3.65, compared to its
prior range of $3.60 to $3.85. The new guidance range includes the
impact of increased inflation and dilution of $0.05 to $0.10
related to the acquisition.
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 2022 results.
To participate in the conference call, dial 1-844-826-3033
(domestic) or 1-412-317-5185 (international) and enter the
conference ID 10166354.
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, May 4, 2022, until 11:59 p.m. ET on Wednesday, May
18, 2022. To hear this recording, dial 1-844-512-2921 (domestic) or
1-412-317-6671 (international) and enter the replay pin number
10166354.
Consolidated Condensed
Statements of Income
(in thousands except per share
amounts, unaudited)
Three Months Ended
March 31,
2022
2021
Net sales
$
242,327
$
232,677
Cost of sales
106,336
104,228
Gross profit
135,991
128,449
% of sales
56.1
%
55.2
%
Selling & administrative expense
102,875
98,340
Research & development expense
10,672
10,027
Income from operations
22,444
20,082
% of sales
9.3
%
8.6
%
Interest expense
4,998
10,351
Income before income taxes
17,446
9,731
Provision for (benefit from) income
taxes
2,471
(129
)
Net income
$
14,975
$
9,860
Basic EPS
$
0.51
$
0.34
Diluted EPS
0.47
0.31
Basic shares
29,428
28,972
Diluted shares
35,155
31,378
Sales Summary
(in millions, unaudited)
Three Months Ended March
31,
% Change
Domestic
International
2022
2021
As Reported
Impact of Foreign
Currency
Constant Currency
As Reported
As Reported
Impact of Foreign
Currency
Constant Currency
Orthopedic Surgery
$
107.5
$
107.2
0.3
%
0.1
%
0.4
%
2.2
%
-0.7
%
0.2
%
-0.5
%
General Surgery
134.8
125.5
7.4
%
0.3
%
7.7
%
7.5
%
7.3
%
0.9
%
8.2
%
$
242.3
$
232.7
4.1
%
0.2
%
4.3
%
5.9
%
2.2
%
0.4
%
2.6
%
Single-use Products
$
201.5
$
187.4
7.5
%
0.2
%
7.7
%
6.2
%
9.2
%
0.4
%
9.6
%
Capital Products
40.8
45.3
-9.7
%
0.1
%
-9.6
%
4.1
%
-19.3
%
0.3
%
-19.0
%
$
242.3
$
232.7
4.1
%
0.2
%
4.3
%
5.9
%
2.2
%
0.4
%
2.6
%
Domestic
$
131.2
$
123.9
5.9
%
0.0
%
5.9
%
International
111.1
108.8
2.2
%
0.4
%
2.6
%
$
242.3
$
232.7
4.1
%
0.2
%
4.3
%
Reconciliation of Reported Net
Income to Adjusted Net Income
(in thousands, except per share
amounts, unaudited)
Three Months Ended March 31,
2022
Gross Profit
Selling & Administrative
Expense
Operating Income
Interest Expense
Tax Expense
Effective Tax Rate
Net Income
Basic EPS
GAAP
Adjustments(2)
Diluted EPS
As reported
$
135,991
$
102,875
$
22,444
$
4,998
$
2,471
14.2
%
$
14,975
$
1,715
$
16,690
% of sales
56.1
%
42.5
%
9.3
%
EPS
$
0.51
$
0.47
Amortization(1)
$
1,500
(6,562
)
8,062
(880
)
2,160
6,782
As adjusted
$
96,313
$
30,506
$
4,118
$
4,631
17.5
%
$
21,757
$
1,715
$
23,472
% of sales
39.7
%
12.6
%
Adjusted Diluted EPS
$
0.70
Weighted average common and potential
common shares, as reported
29,428
5,727
35,155
Convertible note hedges(3)
(1,412
)
Diluted shares, as adjusted
33,743
Three Months Ended March 31,
2021
Gross Profit
Selling & Administrative
Expense
Operating Income
Interest Expense
Tax Expense/ (Benefit)
Effective Tax Rate
Net Income
Basic EPS
GAAP
Adjustments(2)
Diluted EPS
As reported
$
128,449
$
98,340
$
20,082
$
10,351
$
(129
)
-1.3
%
$
9,860
$
-
$
9,860
% of sales
55.2
%
42.3
%
8.6
%
EPS
$
0.34
$
0.31
Restructuring and related costs (4)
-
(414
)
414
-
109
305
$
128,449
$
97,926
$
20,496
$
10,351
$
(20
)
$
10,165
Adjusted gross profit %
55.2
%
Amortization(1)
$
1,500
(6,838
)
8,338
(3,561
)
2,969
8,930
As adjusted
$
91,088
$
28,834
$
6,790
$
2,949
13.4
%
$
19,095
$
-
$
19,095
% of sales
39.1
%
12.4
%
Adjusted Diluted EPS
$
0.63
Weighted average common and potential
common shares, as reported
28,972
2,406
31,378
Convertible note hedges(3)
(1,014
)
Diluted shares, as adjusted
30,364
(1) Includes amortization of intangible
assets, deferred financing fees and debt discount.
(2) The Company adopted ASU 2020-06,
effective January 1, 2022. As a result of the adoption, the Company
is required to compute diluted EPS using the if-converted method.
Under the if-converted method, the numerator is adjusted for
interest expense applicable to the convertible notes (net of tax)
and the denominator includes additional common shares assuming
conversion.
(3) Non-GAAP adjusted dilutive weighted
average shares outstanding exclude dilution that is expected to be
offset by the Company's convertible note hedge transactions.
(4) In 2021, the Company incurred
restructuring costs related to restructuring of our sales
force.
Reconciliation of Reported Net
Income to EBITDA & Adjusted EBITDA
(in thousands, unaudited)
Three Months Ended
March 31,
2022
2021
Net income
$
14,975
$
9,860
Provision for (benefit from) income
taxes
2,471
(129
)
Interest expense
4,998
10,351
Depreciation
4,032
4,757
Amortization
12,799
13,519
EBITDA
$
39,275
$
38,358
Stock based compensation
4,463
3,387
Restructuring and related costs
-
414
Adjusted EBITDA
$
43,738
$
42,159
EBITDA Margin
EBITDA
16.2
%
16.5
%
Adjusted EBITDA
18.0
%
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; the ability of
the Company to advance In2Bones Global, Inc.’s product lines
following the acquisition; uncertainties as to the timing for
completion of the acquisition; the possibility that various
conditions to complete the acquisition may not be satisfied or
waived; transaction costs in connection with the acquisition; the
potential effects of the acquisition on relationships with
employees, customers, other business partners or governmental
entities; any assumptions underlying any of the foregoing as well
as the risk factors discussed in the Company's Annual Report on
Form 10-K for the full year ended December 31, 2021. 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 generally accepted accounting
principles 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/20220504006059/en/
CONMED Corporation Todd W. Garner Chief
Financial Officer 727-214-2975
ToddGarner@conmed.com
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