SAN DIEGO,
Jan. 22, 2018 /PRNewswire/
-- ResMed Inc. (NYSE: RMD, ASX: RMD) today
announced results for its quarter ended December 31, 2017.
Revenue for the quarter was $601.3
million, a 13 percent increase compared to the same period
of the prior year.
"We had a strong quarter with double-digit revenue and
operating profit growth" said Mick
Farrell, ResMed's chief executive officer. "Our masks have
performed well around the world, device sales are solid, and our
cloud-based software continues to grow rapidly. Our operating
excellence initiatives are achieving leverage in the business with
more runway ahead."
Farrell concluded, "We recently announced our first ResMed
branded portable oxygen concentrator, called Mobi, which will
launch in the current quarter. Mobi exemplifies patient-centered
innovation and our commitment to pioneer products and create value
with services and solutions that improve patients' quality of life,
reduce the impact of chronic disease and save healthcare costs
globally."
Analysis of second quarter
results
Second quarter revenue in United
States, Canada and
Latin America, excluding
Brightree, was $329.2 million, a 12
percent increase over the same period of the prior year. Brightree
revenue for the second quarter was $38.7
million, an increase of 14 percent compared to the same
period of the prior year. Revenue in Europe, Asia
and other markets was $233.4 million,
an increase of 8 percent on a constant currency basis, compared to
the same period of the prior year.
Gross margin in the second quarter was 58.2 percent, lower
than the prior year's quarter gross margin of 58.3 percent mainly
due to declines in average selling prices, which were partially
offset by manufacturing and procurement efficiencies.
Income from operations for the quarter was $146.0 million, a 51 percent increase compared
with the quarter ended December 31, 2016. Non-GAAP income from
operations for the quarter was $157.3 million, a 20 percent increase
compared to the same period of the prior year.
Selling, general and administrative expenses were
$151.8 million, a 9 percent increase
over the same period in the prior year, or a 6 percent increase on
a constant currency basis. SG&A expenses improved to 25.2
percent of revenue in the quarter, compared with 26.3 percent
reported in the quarter ended December 31,
2016.
Research and development expenses were $40.6 million, or 6.8 percent of revenue. R&D
expenses increased by 6 percent compared with the same period last
year, or a 4 percent increase on a constant currency
basis.
Amortization of acquired intangible assets was
$11.3 million during the quarter,
which is consistent with the same period last year. Stock-based
compensation costs incurred during the quarter of $12.0 million consisted of expenses associated
with employee equity grants and our employee stock purchase
plan.
Net income for the quarter was $9.5
million, an 88 percent decrease compared to the same period
of the prior year. Non-GAAP net income was
$143.8 million, a 39 percent increase
compared to the prior year.
Non-GAAP measures adjust for amortization of
acquired intangibles, impact of U.S. tax reform on income tax
expense, restructuring expenses, litigation settlement
expenses, acquisition related expenses and the Astral battery field
safety notification expenses.
GAAP diluted earnings per share for the quarter decreased
by 87 percent to $0.07.
Non-GAAP diluted earnings per share of $1.00 were 37 percent higher compared with the
same period of the prior year.
Cash flow from operations for the quarter was $132.6 million compared to net
income in the current quarter of $9.5 million. During the quarter we
paid $49.9 million in
dividends.
Impact of U.S. tax reform on income tax
expense
On December 22, 2017
"H.R.1", originally known as the Tax Cuts and Jobs Act, was enacted
into law ("U.S. tax reform"). ASC 740 Income Taxes
requires companies to recognize the effect of any tax laws during
the period in which they are enacted. Accordingly, the company
performed preliminary calculations and based on these, recognized
additional income tax expense of $126.6
million for the three and six months ended December 31,
2017.
The U.S. tax reform significantly revises the U.S.
corporate income tax by, among other things, imposing a one-time
transition tax on unremitted foreign earnings, lowering the
corporate income tax rate from 35 percent to 21 percent and
implementing a territorial tax system in regard to foreign
earnings. The one-time transition tax on unremitted foreign
earnings results in additional income tax expense of $119.9 million, of which $10.5 million has been recorded as income taxes
payable and $109.4 million has been
recorded as long-term income taxes payable. The lower corporate tax
rate results in a reduction of net deferred tax assets and an
increase in income tax expense of $6.7
million.
Share repurchase program
During the quarter, the company repurchased 100,000 shares
at a cost of $8.5 million, as part of
its ongoing capital management program.
Dividend program
The ResMed board of directors today declared a quarterly
cash dividend of $0.35 per share. The
dividend will have a record date of February 8, 2018, payable
on March 15, 2018. The dividend will be paid in U.S. currency
to holders of ResMed's common stock trading on the New York Stock
Exchange. Holders of Chess Depositary Instruments trading on the
Australian Securities Exchange will receive an equivalent amount in
Australian currency, based on the exchange rate on the record date,
and reflecting the 10:1 ratio between CDIs and NYSE shares. The
ex-dividend date will be February 7, 2018 for common stock
holders and for CDI holders. ResMed has received a waiver from the
ASX's settlement operating rules, which will allow ResMed to defer
processing conversions between its common stock and CDI registers
from February 7, 2018 through February 8, 2018,
inclusive.
Webcast details
ResMed will discuss its second quarter fiscal year 2018
results today on its webcast at 1:30
p.m. U.S. Pacific Time. The live webcast of the call can be
accessed on ResMed's investor relations website at
investor.resmed.com. Please
go to this section of the website and click on the icon for the "Q2
2018 earnings webcast" to register and listen to the live webcast.
A replay of the earnings webcast will be available on ResMed's
investor relations website approximately two hours after the live
webcast. In addition, a telephone replay of the conference
call will be available approximately two hours after the webcast by
dialing 800-585-8367 (U.S.) and +1 416-621-4642 (outside U.S.) and
enter the passcode 2385139. The telephone replay will be available
until February 5, 2018.
About ResMed
ResMed (NYSE: RMD, ASX: RMD), a world-leading connected
health company with more than 4 million cloud-connected devices for
daily remote patient monitoring, changes lives with every breath.
Its award-winning devices and software solutions help treat and
manage sleep apnea, chronic obstructive pulmonary disease and other
respiratory conditions. Its 6,000-member team strives to improve
patients' quality of life, reduce the impact of chronic disease and
save healthcare costs in more than 120 countries.
Safe harbor statement
Statements contained in this release that are not
historical facts are "forward-looking" statements as contemplated
by the Private Securities Litigation Reform Act of 1995. These
forward-looking statements– including statements regarding ResMed's
projections of future revenue or earnings, expenses, new product
development, new product launches and new markets for its products,
litigation, and tax outlook– are subject to risks and
uncertainties, which could cause actual results to materially
differ from those projected or implied in the forward-looking
statements. Additional risks and uncertainties are discussed in
ResMed's periodic reports on file with the U.S. Securities &
Exchange Commission. ResMed does not undertake to update its
forward-looking statements.
For investors
|
For
media
|
Agnes
Lee
|
Jayme
Rubenstein
|
O:
858-836-5971
|
O:
858-836-6798
|
investorrelations@resmed.com
|
news@resmed.com
|
RESMED INC. AND SUBSIDIARIES
|
Condensed
Consolidated Statements of Income (Unaudited)
|
(In thousands, except
per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
Six Months
Ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
revenue
|
$
|
601,273
|
|
$
|
530,397
|
|
$
|
1,124,932
|
|
$
|
995,846
|
|
Cost of
sales
|
|
251,481
|
|
|
221,326
|
|
|
469,535
|
|
|
412,522
|
|
Astral field safety
notification expenses (1)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
5,070
|
|
Gross
profit
|
|
349,792
|
|
|
309,071
|
|
|
655,397
|
|
|
578,254
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
|
151,816
|
|
|
139,307
|
|
|
295,666
|
|
|
268,158
|
|
Research and
development
|
|
40,643
|
|
|
38,190
|
|
|
78,058
|
|
|
72,637
|
|
Restructuring
expenses (1)
|
|
-
|
|
|
4,413
|
|
|
-
|
|
|
4,413
|
|
Litigation settlement
expenses (1)
|
|
-
|
|
|
8,500
|
|
|
-
|
|
|
8,500
|
|
Acquisition related
expenses (1)
|
|
-
|
|
|
10,076
|
|
|
-
|
|
|
10,076
|
|
Amortization of
acquired intangible assets (1)
|
|
11,317
|
|
|
11,690
|
|
|
23,099
|
|
|
23,431
|
|
Total operating
expenses
|
|
203,776
|
|
|
212,176
|
|
|
396,823
|
|
|
387,215
|
|
Income from
operations (1)
|
|
146,016
|
|
|
96,895
|
|
|
258,574
|
|
|
191,039
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expenses), net:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
(expense), net
|
|
(2,791)
|
|
|
(2,437)
|
|
|
(5,706)
|
|
|
(4,929)
|
|
Other, net
|
|
(1,460)
|
|
|
1,749
|
|
|
(2,618)
|
|
|
3,021
|
|
Total other income
(expenses), net
|
|
(4,251)
|
|
|
(688)
|
|
|
(8,324)
|
|
|
(1,908)
|
|
Income before income
taxes
|
|
141,765
|
|
|
96,207
|
|
|
250,250
|
|
|
189,131
|
|
Income taxes
(1)
|
|
132,238
|
|
|
19,464
|
|
|
154,599
|
|
|
36,282
|
|
Net income
(1)
|
$
|
9,527
|
|
$
|
76,743
|
|
$
|
95,651
|
|
$
|
152,849
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
$
|
0.07
|
|
$
|
0.54
|
|
$
|
0.67
|
|
$
|
1.08
|
|
Diluted earnings per
share
|
$
|
0.07
|
|
$
|
0.54
|
|
$
|
0.67
|
|
$
|
1.08
|
|
Non-GAAP diluted
earnings per share (1)
|
$
|
1.00
|
|
$
|
0.73
|
|
$
|
1.66
|
|
$
|
1.34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic shares
outstanding
|
|
142,715
|
|
|
141,310
|
|
|
142,511
|
|
|
141,048
|
|
Diluted shares
outstanding
|
|
143,855
|
|
|
142,097
|
|
|
143,757
|
|
|
141,982
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
See the reconciliation of non-GAAP financial measures
in the table at the end of the press release.
|
RESMED INC. AND SUBSIDIARIES
|
Condensed
Consolidated Balance Sheets (Unaudited - In thousands)
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
June 30,
|
|
|
|
2017
|
|
|
2017
|
|
ASSETS
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
858,899
|
|
$
|
821,935
|
|
Accounts receivable,
net
|
|
482,934
|
|
|
450,530
|
|
Inventories
|
|
296,062
|
|
|
268,319
|
|
Prepayments and other
current assets
|
|
116,454
|
|
|
103,219
|
|
Total current
assets
|
|
1,754,349
|
|
|
1,644,003
|
|
Property, plant and
equipment, net
|
|
401,537
|
|
|
394,241
|
|
Goodwill
|
|
1,075,315
|
|
|
1,064,874
|
|
Other intangibles,
net
|
|
240,027
|
|
|
261,800
|
|
Deferred income taxes
and other non-current assets
|
|
92,772
|
|
|
103,569
|
|
Total non-current
assets
|
|
1,809,651
|
|
|
1,824,484
|
|
Total assets
|
$
|
3,564,000
|
|
$
|
3,468,487
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY:
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
|
78,351
|
|
|
92,763
|
|
Accrued
expenses
|
|
189,368
|
|
|
186,295
|
|
Deferred
revenue
|
|
53,284
|
|
|
51,918
|
|
Income taxes
payable
|
|
16,276
|
|
|
29,150
|
|
Short-term
debt
|
|
1,019,132
|
|
|
-
|
|
Total current
liabilities
|
|
1,356,411
|
|
|
360,126
|
|
Non-current
liabilities:
|
|
|
|
|
|
|
Deferred
revenue
|
|
63,289
|
|
|
53,235
|
|
Deferred income
taxes
|
|
13,141
|
|
|
13,822
|
|
Other long term
liabilities
|
|
2,217
|
|
|
2,427
|
|
Long-term
debt
|
|
-
|
|
|
1,078,611
|
|
Long-term income taxes
payable
|
|
109,414
|
|
|
-
|
|
Total non-current
liabilities
|
|
188,061
|
|
|
1,148,095
|
|
Total
liabilities
|
|
1,544,472
|
|
|
1,508,221
|
|
STOCKHOLDERS' EQUITY:
|
|
|
|
|
|
|
Common stock
|
|
572
|
|
|
569
|
|
Additional paid-in
capital
|
|
1,409,993
|
|
|
1,379,130
|
|
Retained
earnings
|
|
2,312,335
|
|
|
2,316,237
|
|
Treasury
stock
|
|
(1,555,152)
|
|
|
(1,546,611)
|
|
Accumulated other
comprehensive income
|
|
(148,220)
|
|
|
(189,059)
|
|
Total stockholders'
equity
|
$
|
2,019,528
|
|
$
|
1,960,266
|
|
Total liabilities and
stockholders' equity
|
$
|
3,564,000
|
|
$
|
3,468,487
|
|
RESMED INC. AND SUBSIDIARIES
|
Condensed
Consolidated Statements of Cash Flows (Unaudited - In
thousands)
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
|
|
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
Cash flows from operating
activities:
|
|
|
|
|
|
|
Net income
|
$
|
95,651
|
|
$
|
152,849
|
|
Adjustment to
reconcile net income to cash provided by operating
activities:
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
58,945
|
|
|
55,504
|
|
Stock-based
compensation costs
|
|
23,958
|
|
|
22,802
|
|
Impairment of
cost-method investments
|
|
2,254
|
|
|
206
|
|
Changes in fair value
of business combination contingent consideration
|
|
-
|
|
|
10,076
|
|
Changes in operating
assets and liabilities, net of effect of acquisitions:
|
|
|
|
|
|
|
Accounts receivable,
net
|
|
(26,145)
|
|
|
(7,080)
|
|
Inventories,
net
|
|
(20,760)
|
|
|
(36,104)
|
|
Prepaid expenses, net
deferred income taxes and other current assets
|
|
(2,858)
|
|
|
(15,197)
|
|
Accounts payable,
accrued expenses and other
|
|
95,489
|
|
|
23,086
|
|
Net cash provided by
operating activities
|
|
226,534
|
|
|
206,142
|
|
Cash flows from investing
activities:
|
|
|
|
|
|
|
Purchases of
property, plant and equipment
|
|
(32,000)
|
|
|
(29,247)
|
|
Patent registration
costs
|
|
(4,624)
|
|
|
(4,603)
|
|
Business
acquisitions, net of cash acquired
|
|
-
|
|
|
(3,184)
|
|
Investments in
cost-method investments
|
|
(3,725)
|
|
|
(3,867)
|
|
Proceeds / (Payments)
on maturity of foreign currency contracts
|
|
(3,330)
|
|
|
8,209
|
|
Net cash used in
investing activities
|
|
(43,679)
|
|
|
(32,692)
|
|
Cash flows from financing
activities:
|
|
|
|
|
|
|
Proceeds from
issuance of common stock, net
|
|
6,587
|
|
|
9,816
|
|
Purchases of treasury
stock
|
|
(8,541)
|
|
|
-
|
|
Proceeds from
borrowings, net of borrowing costs
|
|
50,000
|
|
|
75,000
|
|
Repayment of
borrowings
|
|
(110,000)
|
|
|
(80,000)
|
|
Dividends
paid
|
|
(99,553)
|
|
|
(92,865)
|
|
Net cash (used in) /
provided by financing activities
|
|
(161,507)
|
|
|
(88,049)
|
|
Effect of exchange
rate changes on cash
|
|
15,616
|
|
|
(28,689)
|
|
Net increase /
(decrease) in cash and cash equivalents
|
|
36,964
|
|
|
56,712
|
|
Cash and cash
equivalents at beginning of period
|
|
821,935
|
|
|
731,434
|
|
Cash and cash equivalents at end of
period
|
$
|
858,899
|
|
$
|
788,146
|
|
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
|
(In US$ thousands,
except share and per share data)
|
|
The measure,
"non-GAAP income from operations" is reconciled with GAAP income
from operations below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
Six Months
Ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
GAAP income from
operations
|
$
|
146,016
|
|
$
|
96,895
|
|
$
|
258,574
|
|
$
|
191,039
|
|
Amortization of
acquired intangible assets (A)
|
|
11,317
|
|
|
11,690
|
|
|
23,099
|
|
|
23,431
|
|
Restructuring
expenses (A)
|
|
-
|
|
|
4,413
|
|
|
-
|
|
|
4,413
|
|
Litigation settlement
expenses (A)
|
|
-
|
|
|
8,500
|
|
|
-
|
|
|
8,500
|
|
Acquisition related
expenses (A)
|
|
-
|
|
|
10,076
|
|
|
-
|
|
|
10,076
|
|
Astral battery field
safety notification expenses (A)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
5,070
|
|
Non-GAAP income from
operations
|
$
|
157,333
|
|
$
|
131,574
|
|
$
|
281,673
|
|
$
|
242,529
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The measures
"non-GAAP net income" and "non-GAAP diluted earnings per share" are
reconciled with GAAP net income and GAAP diluted earnings per share
in the table below:
|
|
|
Three Months
Ended
|
|
|
Six Months
Ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
GAAP net
income
|
$
|
9,527
|
|
$
|
76,743
|
|
$
|
95,651
|
|
$
|
152,849
|
|
Amortization of
acquired intangible assets, net of tax
(A)
|
|
7,697
|
|
|
7,968
|
|
|
15,710
|
|
|
15,975
|
|
U.S. tax reform
transition impact (A)
|
|
119,880
|
|
|
-
|
|
|
119,880
|
|
|
-
|
|
U.S. tax reform
impact on deferred taxes (A)
|
|
6,723
|
|
|
-
|
|
|
6,723
|
|
|
-
|
|
Restructuring
expenses, net of tax (A)
|
|
-
|
|
|
3,085
|
|
|
-
|
|
|
3,085
|
|
Litigation settlement
expenses, net of tax (A)
|
|
-
|
|
|
5,392
|
|
|
-
|
|
|
5,392
|
|
Acquisition related
expenses (A)
|
|
-
|
|
|
10,076
|
|
|
-
|
|
|
10,076
|
|
Astral battery field
safety notification expenses (A)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
3,549
|
|
Non-GAAP net income
(A)
|
$
|
143,827
|
|
$
|
103,264
|
|
$
|
237,964
|
|
$
|
190,926
|
|
Diluted shares
outstanding
|
|
143,855
|
|
|
142,097
|
|
|
143,757
|
|
|
141,982
|
|
GAAP diluted earnings
per share
|
$
|
0.07
|
|
$
|
0.54
|
|
$
|
0.67
|
|
$
|
1.08
|
|
Non-GAAP diluted
earnings per share (A)
|
$
|
1.00
|
|
$
|
0.73
|
|
$
|
1.66
|
|
$
|
1.34
|
|
|
|
(A)
|
ResMed adjusts for
the impact of the amortization of acquired intangibles, impact of
U.S. tax reform, restructuring expenses, litigation settlement
expenses, acquisition related expenses and the Astral battery field
safety notification expenses, from their evaluation of ongoing
operations and believes investors benefit from adjusting these
items to facilitate a more meaningful evaluation of current
operating performance.
|
|
|
|
ResMed believes that
non-GAAP diluted earnings per share is an additional measure of
performance investors can use to compare operating results between
reporting periods. ResMed uses non-GAAP information internally in
planning, forecasting, and evaluating the results of operations in
the current period and in comparing it to past periods. ResMed
believes this information provides investors better insight in
evaluating ResMed's performance from core operations and provides
consistent financial reporting. Our use of non-GAAP measures is
intended to supplement, and not to replace, our presentation of net
income and other GAAP measures. Like all non-GAAP measures,
non-GAAP earnings are subject to inherent limitations because they
do not include all the expenses that must be included under
GAAP.
|
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SOURCE ResMed Inc.