St. Jude Medical, Inc. (NYSE: STJ) today reported sales and net
earnings for the first quarter ended April 2, 2011.
First Quarter Sales
The Company reported net sales of $1.376 billion in the first
quarter of 2011, an increase of 9 percent compared with the $1.262
billion in the first quarter of 2010. Revenue for the first quarter
increased 8 percent after adjusting for the impact of foreign
currency. Foreign currency translation comparisons increased first
quarter sales by approximately $17 million.
Commenting on the first quarter and the Company’s growth
program, St. Jude Medical Chairman, President and Chief Executive
Officer Daniel J. Starks said, “During the first quarter, we
continued to make good progress in developing the new growth
drivers we need to return to double-digit sales growth on a
sustainable basis. Our gross margin has strengthened, we have
continued to invest in research and development at an elevated
rate, and our sales and earnings growth outlook have both improved.
We are off to a good start making 2011 another very successful year
for St. Jude Medical.”
Cardiac Rhythm Management (CRM)
Total CRM sales, which include ICD and pacemaker products, were
$762 million for the first quarter of 2011, a 1 percent increase
compared with the first quarter of 2010. Total CRM sales for the
first quarter grew 5 percent after adjusting for the one-time
benefit of a competitor’s suspension of sales of ICD products in
the United States during the prior year.
Of that total, ICD product sales were $465 million in the first
quarter, a 3 percent increase compared with the first quarter of
2010. Adjusting for the one-time benefit we experienced in the U.S.
in the prior year, ICD revenue grew 9 percent this quarter.
First quarter pacemaker sales were $297 million, a decrease of 1
percent from the comparable quarter of 2010.
Atrial Fibrillation (AF)
AF product sales for the first quarter totaled $195 million, a
15 percent increase over the first quarter of 2010.
Neuromodulation
St. Jude Medical sales of neuromodulation products were $92
million in the first quarter of 2011, up 10 percent from the
comparable quarter of 2010.
Cardiovascular
Total cardiovascular sales, which primarily include vascular and
structural heart products, were $327 million for the first quarter
of 2011, a 28 percent increase over the first quarter of 2010. This
division now includes sales from AGA Medical, Inc., which St. Jude
Medical acquired in November 2010.
Sales of vascular products during the first quarter of 2011 were
$184 million, up 8 percent from the comparable quarter of 2010.
Structural heart product sales for the first quarter of 2011
were $143 million, a 66 percent increase over the first quarter of
2010, with the addition of AGA Medical products to the
category.
First Quarter Earnings Results
In the first quarter of 2011 the Company recorded after-tax
charges of $28 million, related primarily to acquisition and
integration costs associated with AGA Medical, including an
increase in cost of goods sold related to the step up in inventory
values required under acquisition accounting.
Including these items, reported net earnings for the first
quarter of 2011 was $233 million, or $0.71 per share. This compares
to reported net earnings for the first quarter of 2010 of $239
million, or $0.73 per share. Excluding these items, adjusted net
earnings for the first quarter of 2011 were $262 million, or $0.80
per share. A reconciliation of the Company's non-GAAP adjusted net
earnings per share to the Company's GAAP net earnings per share is
provided in the schedule at the end of the press release.
Second Quarter and Full Year 2011 Sales and Earnings
Guidance
During a conference call today, St. Jude Medical will provide
its range for revenue expectations for the second quarter and full
year by product category.
The Company expects its consolidated adjusted net earnings for
the second quarter of 2011 to be in the range of $0.83 to $0.85 per
diluted share and is raising its full-year 2011 guidance to be in
the range of $3.28 to $3.33. A further reconciliation of the
Company’s quarterly and annual guidance is provided in the schedule
below.
Non-GAAP Financial Measures
The Company provides adjusted net earnings and adjusted net
earnings per share because St. Jude Medical management believes
that in order to properly understand the Company’s short-term and
long-term financial trends, investors may wish to consider the
impact of certain adjustments (such as in-process research and
development charges, impairment charges, restructuring charges,
litigation charges or litigation reserve adjustments and income tax
adjustments). These adjustments result from facts and circumstances
(such as business development activities, restructuring activities,
asset impairment events or developments, settlements and other
developments relating to litigation and resolution of audits by tax
authorities) that vary in frequency and impact on the Company’s
results of operations. St. Jude Medical management uses adjusted
net earnings and adjusted net earnings per share to forecast and
evaluate the operational performance of the Company as well as to
compare results of current periods to prior periods on a
consolidated basis.
Non-GAAP financial measures used by the Company may be
calculated differently from, and therefore may not be comparable
to, similarly titled measures used by other companies. Investors
should consider non-GAAP measures in addition to, and not as a
substitute for, or superior to, financial performance measures
prepared in accordance with GAAP.
Conference Call/Webcast
St. Jude Medical’s first quarter 2011 earnings call can be heard
live today beginning at 7 a.m. CDT (also archived for 90 days) on
the Investor Relations section of our website sjm.com.
About St. Jude Medical
St. Jude Medical develops medical technology and services that
focus on putting more control into the hands of those who treat
cardiac, neurological and chronic pain patients worldwide. The
company is dedicated to advancing the practice of medicine by
reducing risk wherever possible and contributing to successful
outcomes for every patient. St. Jude Medical is headquartered in
St. Paul, Minn. and has four major focus areas that include:
cardiac rhythm management, atrial fibrillation, cardiovascular and
neuromodulation. For more information, please visit sjm.com.
Forward-Looking Statements
This news release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995
that involve risks and uncertainties. Such forward-looking
statements include the expectations, plans and prospects for the
Company, including potential clinical successes, anticipated
regulatory approvals and future product launches, and projected
revenue, margins, earnings and market shares. The statements made
by the Company are based upon management’s current expectations and
are subject to certain risks and uncertainties that could cause
actual results to differ materially from those described in the
forward-looking statements. These risks and uncertainties include
market conditions and other factors beyond the Company’s control
and the risk factors and other cautionary statements described in
the Company’s filings with the SEC, including those described in
the Risk Factors and Cautionary Statements sections of the
Company’s Annual Report on Form 10-K for the fiscal year ended
January 1, 2011. The Company does not intend to update these
statements and undertakes no duty to any person to provide any such
update under any circumstance.
Summary of First Quarter 2011
Sales Reported % Quarter Ended 04/02/11
Sales Growth vs. (dollars in millions)
1Q10
Total Sales $1,376 9%
Total International Sales $700
Total US Sales $676
Worldwide Cardiac Rhythm Management
$762 1% International Cardiac Rhythm
Management $351 U.S. Cardiac
Rhythm Management $411
Worldwide ICD $465 3%
International ICD $185 U.S. ICD
$280
Worldwide
Pacemakers $297 -1%
International Pacemakers $166
U.S. Pacemakers $131
Worldwide Atrial Fibrillation $195
15% International Atrial Fibrillation
$115 U.S. Atrial Fibrillation
$80
Worldwide Cardiovascular
$327 28% International
Cardiovascular $212 U.S.
Cardiovascular $115
Worldwide Neuromodulation $92
10% International Neuromodulation $22
U.S. Neuromodulation $70
Condensed
Consolidated Balance Sheets (in thousands)
(Unaudited) April 2, 2011
January 1, 2011 Cash and cash equivalents $663,797 $500,336
Accounts receivable, net 1,382,251 1,331,210 Inventories 696,864
667,545 Other current assets 390,867 413,057 Property, plant &
equipment, net 1,351,984 1,323,931 Goodwill 2,977,044 2,955,602
Other intangible assets, net 968,014 987,060 Other assets 405,264
387,707 Total assets $8,836,085 $8,566,448 Current debt
obligations $78,417 $79,637 Other current liabilities 888,764
937,613 Long-term debt 2,558,537 2,431,966 Deferred income taxes,
net 310,537 310,503 Long-term other liabilities 462,957 435,058
Total equity 4,536,873 4,371,671 Total liabilities & equity
$8,836,085 $8,566,448
St. Jude Medical, Inc.
Condensed Consolidated Statements of Earnings (in
thousands, except per share amounts) (Unaudited)
Three Months Ended
April 2,
2011 April 3, 2010 Net sales $1,375,513 $1,261,696 Cost
of sales 364,442 321,169 Gross profit 1,011,071 940,527
Selling, general & administrative expense 513,320 443,290
Research & development expense 175,733 151,230 Operating
profit 322,018 346,007 Other income (expense), net (26,452)
(20,316) Earnings before income taxes 295,566 325,691 Income
tax expense 62,138 87,122 Net earnings $233,428 $238,569
Adjusted net earnings (Non-GAAP) $261,540 (1) $244,920 (2)
Diluted net earnings per share $0.71 $0.73 Adjusted diluted net
earnings per share (Non-GAAP) $0.80 (1) $0.75 (2) Weighted
average shares outstanding- diluted 328,878 328,062 Cash
dividends declared per share $0.21
(1) First quarter 2011 adjusted net
earnings and adjusted diluted net earnings per share exclude the
following after-tax charges totaling $28,112 or $0.09 per
share:
- $9,263 charges, or $0.03 per share,
related to AGA Medical Holdings, Inc. acquired inventory step up
amortization expense. The associated pre-tax amount of $14,820 was
recorded to Cost of sales.
- $18,849 charges, or $0.06 per share,
primarily related to post acquisition expenses for AGA Medical
Holdings, Inc. which principally include contract termination costs
and other integration costs in international locations. The
associated pre-tax amount of $24,922 was recorded to SG&A
expense.
(2) First quarter 2010 adjusted net
earnings and adjusted diluted net earnings per share include $6,351
of income tax benefit, or $0.02 per share, related to the benefit
from the federal research and development tax credit extended in
the fourth quarter of 2010 retroactive to the beginning of the
year.
2011 Earnings Guidance
Reconciliation Second Quarter 2011 Full Year 2011
Estimated 2011 diluted net earnings per share $ 0.80 - $ 0.82 $
3.16 - $ 3.21 Estimated 2011 adjusted diluted net earnings per
share (Non-GAAP) $ 0.83 - $ 0.85 (3) $ 3.28 - $ 3.33 (3) (3)
The Company's above estimated 2011 adjusted diluted net earnings
per share (Non-GAAP) excludes the impact of the increase in
inventory of AGA Medical Holdings, Inc. estimated to be absorbed in
Cost of sales related to the step up in inventory values required
under acquisition accounting and the post acquisition expenses
recorded in the first quarter.
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