ALPHARETTA, Ga., Feb. 21,
2023 /PRNewswire/ -- Avanos Medical, Inc. (NYSE:
AVNS) today reported fourth quarter and full-year 2022 results.
"We were pleased to finish 2022 with a strong fourth quarter,
continued margin expansion and meaningful free cash flow," stated
Joe Woody, Avanos' chief executive
officer. Woody continued, "Our team is focused on execution and we
are determined to deliver on the three-year transformation plan we
described last month at the JPMorgan conference."
2022 Financial Highlights
- Fourth quarter net sales totaled $217
million, a 12% increase from the prior year. For the
full-year, net sales increased 10% to $820
million.
- Fourth quarter diluted earnings per share were $0.36 compared to $0.24 per share a year ago, and fourth quarter
adjusted diluted earnings per share were $0.60 compared to $0.50 in the prior year. 2022 full year diluted
earnings per share were $1.07
compared to $0.13 per share in the
prior year, and adjusted diluted earnings per share were
$1.65 compared to $1.17 in 2021.
- Fourth quarter free cash flow was $29
million following $23 million
in the third quarter and compared to $47
million in the fourth quarter of last year. 2022 full-year
free cash flow was $72 million
compared to $66 million in 2021.
During the year, we changed our inventory accounting method from
last-in, first-out (LIFO) to first-in, first-out (FIFO). We have
restated prior year financial information to reflect that change. A
tabular presentation of the effects of our results of operations
from this change in accounting principle is included in the
accompanying tables.
In January, we announced a three-year transformation plan that
will be focused on four key priorities: optimizing the commercial
organization; transforming the product portfolio; implementing cost
management initiatives to enhance operating profitability; and
continuing to efficiently deploy capital while maintaining a
focused and disciplined approach to M&A. We anticipate that
this plan will ultimately result in savings of between $45 million and $55
million compared to 2022.
Fourth Quarter 2022 Operating Results
In the fourth quarter of 2022, net sales totaled $217 million, a 12% increase compared to the
prior year. Volume was driven by continued strong demand for
Digestive Health products and improvements in Interventional Pain
solutions, partially offset by lower volume in Respiratory Health
products compared to the pandemic-driven demand in the prior year
and expected lower volume in Acute Pain products due to fewer
elective procedures.
Gross margin for the fourth quarter was 54% compared to 51% a
year ago. Adjusted gross margin was 56% compared to 54% in the
prior year.
Operating profit in the quarter was $26
million compared to $27
million in the fourth quarter of 2021. On an adjusted basis,
operating profit was $40 million
compared to $27 million a year
ago.
Adjusted EBITDA for the quarter was $45
million compared to $33
million in the prior year.
Full-Year 2022 Operating Results
Net sales increased 10% to $820
million in 2022 primarily due to incremental revenue from
the OrthogenRx acquisition. Digestive Health products experienced
strong demand and volume, but was offset by decreased demand and
volume in Respiratory Health products. In addition, 0.7% of
favorable pricing was offset by 1.9% of unfavorable foreign
currency translation effects.
Gross margin for 2022 was 55% compared to 49% in 2021. Adjusted
gross margin was 57%, up from 52% last year due primarily to
favorable product mix and manufacturing efficiencies, partially
offset by higher costs across our supply chain.
Operating income in 2022 was $74
million compared to $10
million in the prior year. On an adjusted basis, operating
profit was $114 million compared to
$75 million in 2021.
For the full-year, adjusted EBITDA totaled $136 million, compared to $96 million in the prior year.
Cash Flow and Balance Sheet
Cash from operations less capital expenditures, or free cash
flow, for the fourth quarter of 2022 was $29
million, compared to $47
million a year ago. For 2022, free cash flow was
$72 million, compared to $66 million in the prior year.
At year-end 2022, the company's cash balance was $128 million compared to $119 million at year-end 2021. Total debt at the
end of the fourth quarter totaled $232 million, consisting of
borrowings of $123 million on the company's term loan facility
and $109 million on the revolving
credit facility.
2023 Outlook
Excluding the expected impact of the product portfolio
rationalization under the transformation plan, the company
anticipates organic growth is expected to be low single-digit. In
addition, the company expects operating profit margin and EBITDA
margin expansion of approximately 100 basis points and adjusted
diluted EPS of between $1.60 and $1.80.
Non-GAAP Financial Measures
This press release and the accompanying tables include the
following financial measures that have not been calculated in
accordance with accounting principles generally accepted in the
U.S., or GAAP, and are therefore referred to as non-GAAP financial
measures:
- Adjusted net income
- Adjusted diluted earnings per share
- Adjusted gross and operating profit
- Adjusted effective tax rate
- Adjusted EBITDA
- Free cash flow
These non-GAAP financial measures exclude the following items,
as applicable, for the relevant time periods as indicated in the
accompanying non-GAAP reconciliations to the comparable GAAP
financial measures:
- Incremental expenses associated with altering operations in
response to the COVID-19 pandemic.
- Expenses associated with restructuring activities, including
IT-related charges.
- Expenses associated with post-divestiture transition
activities.
- The amortization of intangible assets associated with prior
business acquisitions.
- Expenses associated with certain litigation matters.
- Compliance with the European Union Medical Device Regulation
(the EU MDR).
- Certain acquisition and integration charges related to the
acquisition of OrthogenRx and Game Ready.
- The tax effects of certain adjusting items.
- The benefit associated with tax effects of the CARES Act.
- The positive or negative effect of changes in currency exchange
rates during the year.
The company provides these non-GAAP financial measures as
supplemental information to our GAAP financial measures. Management
and the company's Board of Directors use net sales on a constant
currency basis, adjusted net income, adjusted diluted earnings per
share, adjusted operating profit, adjusted EBITDA, and free cash
flow to (a) evaluate the company's historical and prospective
financial performance and its performance relative to its
competitors, (b) allocate resources and (c) measure the operational
performance of the company's business units and their managers.
Management also believes that the use of an adjusted effective tax
rate provides improved insight into the tax effects of the
company's ongoing business operations.
Additionally, the Compensation Committee of the company's Board
of Directors will use certain of the non-GAAP financial measures
when setting and assessing achievement of incentive compensation
goals. These goals are based, in part, on the company's net sales
on a constant currency basis and adjusted EBITDA, which will be
determined by excluding certain items that are used in calculating
these non-GAAP financial measures.
Our competitors may define these non-GAAP financial measures
differently, and as a result, our measure of these non-GAAP
financial measures may not be directly comparable to those of other
companies. Items excluded from these non-GAAP financial measures
are significant components in understanding and assessing financial
performance. These non-GAAP financial measures are supplemental
measures of operating performance that do not represent, and should
not be considered in isolation or as an alternative to, or
substitute for, the financial statement data presented in our
consolidated financial statements as indicators of financial
performance. These non-GAAP financial measures have limitations as
analytical tools, and should not be considered in isolation, or as
a substitute for analysis of our results as reported under GAAP. We
compensate for these limitations by relying primarily on our GAAP
results and using these non-GAAP financial measures as supplemental
information.
Reconciliations of these non-GAAP financial measures to the most
directly comparable GAAP financial measures are included in the
attached financial tables.
Conference Call Webcast
Avanos Medical, Inc. will host a conference call today at
9 a.m. ET. The conference call can be
accessed live over the internet at https://avanos.investorroom.com
or via telephone by dialing 877-240-5772 in the United States. A replay of the call will
be available at noon ET today by
calling 877-344-7529 in the United
States and entering passcode 9599533. A webcast of the
call will also be archived in the Investors section on the Avanos
website.
About Avanos Medical, Inc.
Avanos Medical (NYSE: AVNS) is a medical device company focused
on delivering clinically superior breakthrough solutions that will
help patients get back to the things that matter. Headquartered in
Alpharetta, Georgia, Avanos is
committed to creating the next generation of innovative healthcare
solutions which will address our most important healthcare needs,
such as reducing the use of opioids while helping patients move
from surgery to recovery. Avanos develops, manufactures and markets
its recognized brands in more than 90 countries. For more
information, visit www.avanos.com and follow Avanos Medical on
Twitter (@AvanosMedical), LinkedIn and Facebook.
Forward-Looking Statements
This press release contains information that includes or is
based on "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking
statements are based on the current plans and expectations of
management and are subject to various risks and uncertainties that
could cause our actual results to differ materially from those
expressed or implied in such statements. Forward-looking statements
include all statements that do not relate solely to historical or
current facts, and can generally be identified by the use of words
such as "may", "believe", "will", "expect", "project", "estimate",
"anticipate", "plan", or "continue" and similar expressions, among
others. Such factors include, but are not limited to: weakening of
economic conditions that could adversely affect the level of demand
for our products; pricing pressures generally, including
cost-containment measures that could adversely affect the price of
or demand for our products; risks related to the ongoing COVID-19
pandemic; shortage in drugs used in our Acute Pain products or
other disruptions in our supply chain; the ongoing conflict between
Russia and Ukraine; our ability to successfully execute
on or achieve the expected benefits of our transformation
initiative; inflationary pressures; changes in foreign exchange
markets; legislative and regulatory actions; unanticipated issues
arising in connection with clinical studies and otherwise that
affect U.S. Food and Drug Administration approval of new products;
changes in reimbursement levels from third-party payors; a
significant increase in product liability claims; the impact of
investigative and legal proceedings and compliance risks; the
impact of the federal legislation to reform the United States healthcare system; changes
in financial markets; and changes in the competitive environment.
Additional information concerning these and other factors that may
impact future results is contained in our filings with the U.S.
Securities and Exchange Commission, including our most recent Form
10-K and Quarterly Reports on Form 10-Q.
AVANOS MEDICAL,
INC. CONDENSED CONSOLIDATED INCOME
STATEMENTS (unaudited) (in millions, except per
share amounts)
|
|
|
Three Months Ended
December 31,
|
|
Year Ended December
31,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Net
Sales
|
$
217.5
|
|
$
193.4
|
|
$
820.0
|
|
$
744.6
|
Cost of products
sold
|
100.6
|
|
94.5
|
|
370.0
|
|
378.8
|
Gross
Profit
|
116.9
|
|
98.9
|
|
450.0
|
|
365.8
|
Research and
development expenses
|
7.5
|
|
7.6
|
|
30.6
|
|
32.3
|
Selling and general
expenses
|
82.6
|
|
75.2
|
|
341.9
|
|
300.3
|
Other expense
(income), net
|
0.6
|
|
(10.9)
|
|
3.5
|
|
22.8
|
Operating
Income
|
26.2
|
|
27.0
|
|
74.0
|
|
10.4
|
Interest
income
|
0.7
|
|
—
|
|
1.2
|
|
0.2
|
Interest
expense
|
(3.0)
|
|
(0.7)
|
|
(10.0)
|
|
(3.3)
|
Income Before Income
Taxes
|
23.9
|
|
26.3
|
|
65.2
|
|
7.3
|
Income tax
provision
|
(7.0)
|
|
(14.8)
|
|
(14.7)
|
|
(1.0)
|
Net
Income
|
$
16.9
|
|
$
11.5
|
|
$
50.5
|
|
$
6.3
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
2.3
|
|
0.7
|
|
8.8
|
|
3.1
|
Income tax
provision
|
7.0
|
|
14.8
|
|
14.7
|
|
1.0
|
Depreciation and
amortization
|
13.4
|
|
9.5
|
|
47.7
|
|
38.3
|
EBITDA
|
$
39.6
|
|
$
36.5
|
|
$
121.7
|
|
$
48.7
|
|
|
|
|
|
|
|
|
Earnings Per
Share
|
|
|
|
|
|
|
|
Basic
|
$
0.36
|
|
$
0.24
|
|
$
1.08
|
|
$
0.13
|
Diluted
|
$
0.36
|
|
$
0.24
|
|
$
1.07
|
|
$
0.13
|
|
|
|
|
|
|
|
|
Common Shares
Outstanding
|
|
|
|
|
|
|
|
Basic
|
46.5
|
|
48.2
|
|
46.9
|
|
48.1
|
Diluted
|
47.0
|
|
48.6
|
|
47.3
|
|
48.6
|
AVANOS MEDICAL,
INC. EFFECTS OF CHANGE IN ACCOUNTING
PRINCIPLE CONDENSED CONSOLIDATED INCOME
STATEMENTS (in millions, except per share
amounts)
|
|
|
Three Months Ended
December 31, 2022
|
|
Year Ended December
31, 2022
|
|
As
Calculated
(LIFO)
|
|
As
Reported
(FIFO)
|
|
Effect
of
Change
|
|
As
Calculated
(LIFO)
|
|
As
Reported
(FIFO)
|
|
Effect
of
Change
|
Cost of products
sold
|
$
100.1
|
|
$
100.6
|
|
$
0.5
|
|
$
370.7
|
|
$
370.0
|
|
$
(0.7)
|
Income (loss) before
income taxes
|
24.4
|
|
23.9
|
|
(0.5)
|
|
64.5
|
|
65.2
|
|
0.7
|
Income tax (provision)
benefit
|
(7.1)
|
|
(7.0)
|
|
0.1
|
|
(14.6)
|
|
(14.7)
|
|
(0.1)
|
Net income
(loss)
|
17.3
|
|
16.9
|
|
(0.4)
|
|
49.9
|
|
50.5
|
|
0.6
|
Earnings (loss) per
share:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
0.37
|
|
$
0.36
|
|
$
(0.01)
|
|
$
1.06
|
|
$
1.08
|
|
$
0.02
|
Diluted
|
$
0.37
|
|
$
0.36
|
|
$
(0.01)
|
|
$
1.05
|
|
$
1.07
|
|
$
0.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31, 2021
|
|
Year Ended December
31, 2021
|
|
As
Reported
(LIFO)
|
|
As
Adjusted
(FIFO)
|
|
Effect
of
Change
|
|
As
Reported
(LIFO)
|
|
As
Adjusted
(FIFO)
|
|
Effect
of
Change
|
Cost of products
sold
|
$
96.5
|
|
$
94.5
|
|
$
(2.0)
|
|
$
380.3
|
|
$
378.8
|
|
$
(1.5)
|
Income (loss) before
income taxes
|
24.3
|
|
26.3
|
|
2.0
|
|
5.8
|
|
7.3
|
|
1.5
|
Income tax (provision)
benefit
|
(14.3)
|
|
(14.8)
|
|
(0.5)
|
|
(0.6)
|
|
(1.0)
|
|
(0.4)
|
Net income
(loss)
|
10
|
|
11.5
|
|
1.5
|
|
5.2
|
|
6.3
|
|
1.1
|
Earnings (loss) per
share:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
0.21
|
|
$
0.24
|
|
$
0.03
|
|
$
0.11
|
|
$
0.13
|
|
$
0.02
|
Diluted
|
$
0.21
|
|
$
0.24
|
|
$
0.03
|
|
$
0.11
|
|
$
0.13
|
|
$
0.02
|
AVANOS MEDICAL,
INC. NON-GAAP RECONCILIATIONS (unaudited) (in
millions)
|
|
|
Gross
Profit
|
|
Three Months Ended
December 31,
|
|
Year Ended December
31,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
As reported
|
$
116.9
|
|
$
98.9
|
|
$
450.0
|
|
$
365.8
|
2020 Restructuring
charges
|
—
|
|
0.1
|
|
—
|
|
4.2
|
Post-Divestiture
restructuring and transition charges
|
—
|
|
3.1
|
|
—
|
|
12.4
|
Acquisition and
integration-related charges
|
—
|
|
0.2
|
|
1.4
|
|
0.3
|
EU MDR
Compliance
|
(0.2)
|
|
—
|
|
—
|
|
—
|
Intangibles
amortization
|
4.3
|
|
1.7
|
|
14.4
|
|
6.7
|
As adjusted
non-GAAP
|
$
121.0
|
|
$
104.0
|
|
$
465.8
|
|
$
389.4
|
Gross profit margin, as
reported
|
53.8 %
|
|
51.1 %
|
|
54.9 %
|
|
49.1 %
|
Gross profit margin, as
adjusted
|
55.6 %
|
|
53.8 %
|
|
56.8 %
|
|
52.3 %
|
|
|
Operating
Profit
|
|
Three Months Ended
December 31,
|
|
Year Ended December
31,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
As reported
|
$
26.2
|
|
$
27.0
|
|
$
74.0
|
|
$
10.4
|
COVID-19 related
expenses
|
—
|
|
0.1
|
|
—
|
|
0.3
|
2020 Restructuring
charges(a)
|
—
|
|
2.0
|
|
—
|
|
12.4
|
Post-Divestiture
restructuring and transition charges(b)(c)
|
—
|
|
5.0
|
|
—
|
|
14.1
|
Acquisition and
integration-related charges
|
0.4
|
|
0.9
|
|
3.4
|
|
1.6
|
EU MDR
Compliance
|
1.5
|
|
1.6
|
|
6.9
|
|
4.0
|
Other
items(d)
|
3.8
|
|
—
|
|
3.8
|
|
—
|
Litigation and
legal(e)
|
—
|
|
(13.5)
|
|
—
|
|
15.0
|
Intangibles
amortization
|
7.7
|
|
4.2
|
|
25.7
|
|
16.7
|
As adjusted
non-GAAP
|
$
39.6
|
|
$
27.3
|
|
$
113.8
|
|
$
74.5
|
|
|
|
|
(a)
|
In the three months
ended December 31, 2021, 2020 Restructuring charges include $0.1
million in "Cost of products sold" (see "Gross Profit" table), $0.9
million in "Selling and general expenses" and $1.0 million in
"Other expense (income), net." In the year ended December 31, 2021,
2020 Restructuring charges include $4.2 million in "Cost of
products sold", $2.4 million in "Selling and general expenses" and
$5.8 million in "Other expense (income),
net."
|
(b)
|
Except for amounts
impacting gross profit (see "Gross Profit" table), post divestiture
restructuring are included in "Other expense (income),
net."
|
(c)
|
In the three months
ended December 31, 2021, post divestiture transition charges
includes $0.3 million in "Cost of products sold" (see "Gross
Profit" table). For the year ended December 31, 2021, post
divestiture transition charges includes $4.1 million, in "Cost of
products sold," and $0.2 million of expense in "Selling and general
expenses".
|
(d)
|
Other items includes
$2.6 million of consulting costs associated with evaluation of
overall scope and alternatives for transforming our business and
$1.2 million for the impairment of certain assets associated with
research and development projects that were cancelled.
|
(e)
|
Litigation and legal
expenses are included in "Other expense (income), net."
|
|
|
AVANOS MEDICAL,
INC. NON-GAAP RECONCILIATIONS (unaudited) (in
millions)
|
|
|
Income Before
Taxes
|
|
Three Months Ended
December 31,
|
|
Year Ended December
31,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
As reported
|
$
23.9
|
|
$
26.3
|
|
$
65.2
|
|
$
7.3
|
COVID-19 related
expenses
|
—
|
|
0.1
|
|
—
|
|
0.3
|
2020 Restructuring
charges
|
—
|
|
2.0
|
|
—
|
|
12.4
|
Post-Divestiture
restructuring and transition charges
|
—
|
|
5.0
|
|
—
|
|
14.1
|
Acquisition and
integration-related charges
|
0.4
|
|
0.9
|
|
3.4
|
|
1.6
|
EU MDR
Compliance
|
1.5
|
|
1.6
|
|
6.9
|
|
4.0
|
Other items
|
3.8
|
|
—
|
|
3.8
|
|
—
|
Litigation and
legal
|
—
|
|
(13.5)
|
|
—
|
|
15.0
|
Intangibles
amortization
|
7.7
|
|
4.2
|
|
25.7
|
|
16.7
|
Loss on extinguishment
of debt
|
—
|
|
—
|
|
1.1
|
|
—
|
As adjusted
non-GAAP
|
$
37.3
|
|
$
26.6
|
|
$
106.1
|
|
$
71.4
|
|
|
Tax
Provision
|
|
Three Months Ended
December 31,
|
|
Year Ended December
31,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
As reported
|
$
(7.0)
|
|
$
(14.8)
|
|
$
(14.7)
|
|
$
(1.0)
|
Tax effects of
adjusting items
|
(2.8)
|
|
11.7
|
|
(9.9)
|
|
(11.9)
|
Tax effects of the
CARES Act and other
|
0.5
|
|
0.7
|
|
(3.3)
|
|
(1.6)
|
As adjusted
non-GAAP
|
$
(9.3)
|
|
$
(2.4)
|
|
$
(27.9)
|
|
$
(14.5)
|
Effective tax rate, as
reported
|
29.3 %
|
|
56.3 %
|
|
22.5 %
|
|
13.7 %
|
Effective tax rate, as
adjusted
|
24.9 %
|
|
9.0 %
|
|
26.3 %
|
|
20.3 %
|
AVANOS MEDICAL,
INC. NON-GAAP RECONCILIATIONS (unaudited) (in
millions, except per share amounts)
|
|
|
Net
Income
|
|
Three Months Ended
December 31,
|
|
Year Ended December
31,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
As reported
|
$
16.9
|
|
$
11.5
|
|
$
50.5
|
|
$
6.3
|
COVID-19 related
expenses
|
—
|
|
0.1
|
|
—
|
|
0.3
|
2020 Restructuring
charges
|
—
|
|
2.0
|
|
—
|
|
12.4
|
Post-Divestiture
restructuring and transition charges
|
—
|
|
5.0
|
|
—
|
|
14.1
|
Acquisition and
integration-related charges
|
0.4
|
|
0.9
|
|
3.4
|
|
1.6
|
EU MDR
Compliance
|
1.5
|
|
1.6
|
|
6.9
|
|
4.0
|
Other items
|
3.8
|
|
—
|
|
3.8
|
|
—
|
Litigation and
legal
|
—
|
|
(13.5)
|
|
—
|
|
15.0
|
Intangibles
amortization
|
7.7
|
|
4.2
|
|
25.7
|
|
16.7
|
Loss on extinguishment
of debt
|
—
|
|
—
|
|
1.1
|
|
—
|
Tax effects of
adjusting items
|
(2.8)
|
|
11.7
|
|
(9.9)
|
|
(11.9)
|
Tax effects of the
CARES Act and other
|
0.5
|
|
0.7
|
|
(3.3)
|
|
(1.6)
|
As adjusted
non-GAAP
|
$
28.0
|
|
$
24.2
|
|
$
78.2
|
|
$
56.9
|
Diluted EPS, as
reported
|
$
0.36
|
|
$
0.24
|
|
$
1.07
|
|
$
0.13
|
Diluted EPS, as
adjusted
|
$
0.60
|
|
$
0.50
|
|
$
1.65
|
|
$
1.17
|
|
|
EBITDA
|
|
Three Months Ended
December 31,
|
|
Year Ended December
31,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
EBITDA, as
reported
|
$
39.6
|
|
$
36.5
|
|
$
121.7
|
|
$
48.7
|
COVID-19 related
expenses
|
—
|
|
0.1
|
|
—
|
|
0.3
|
2020 Restructuring
charges
|
—
|
|
2.0
|
|
—
|
|
12.4
|
Post-Divestiture
restructuring and transition charges
|
—
|
|
5.0
|
|
—
|
|
14.1
|
Acquisition and
integration-related charges
|
0.4
|
|
0.9
|
|
3.4
|
|
1.6
|
EU MDR
Compliance
|
1.5
|
|
1.6
|
|
6.9
|
|
4.0
|
Other items
|
3.8
|
|
—
|
|
3.8
|
|
—
|
Litigation and
legal
|
—
|
|
(13.5)
|
|
—
|
|
15.0
|
Adjusted
EBITDA
|
$
45.3
|
|
$
32.6
|
|
$
135.8
|
|
$
96.1
|
AVANOS MEDICAL,
INC. NON-GAAP RECONCILIATIONS (unaudited) (in
millions, except per share amounts)
|
|
|
Free Cash
Flow
|
|
Three Months Ended
December 31,
|
|
Year Ended December
31,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Cash provided by
operating activities
|
$
33.7
|
|
$
52.2
|
|
$
90.9
|
|
$
87.3
|
Capital
expenditures
|
(4.9)
|
|
(4.8)
|
|
(19.3)
|
|
(21.0)
|
Free Cash
Flow
|
$
28.8
|
|
$
47.4
|
|
$
71.6
|
|
$
66.3
|
2023
OUTLOOK
|
|
|
Estimated
Range
|
Diluted earnings per
share (GAAP)
|
$
0.96
|
to
|
$
1.32
|
Intangibles
amortization
|
0.20
|
to
|
0.20
|
Restructuring
|
0.41
|
to
|
0.25
|
EU Medical Device
Regulation
|
0.03
|
to
|
0.03
|
Adjusted diluted
earnings per share (non-GAAP)
|
$
1.60
|
to
|
$
1.80
|
AVANOS MEDICAL,
INC. CONDENSED CONSOLIDATED BALANCE
SHEETS (unaudited) (in millions)
|
|
|
As of December
31,
|
|
2022
|
|
2021
|
ASSETS
|
|
|
|
Current
Assets
|
|
|
|
Cash and cash
equivalents
|
$
127.7
|
|
$
118.5
|
Accounts receivable,
net of allowances
|
167.9
|
|
131.2
|
Inventories
|
190.3
|
|
159.3
|
Prepaid expenses and
other current assets
|
13.9
|
|
18.6
|
Total Current
Assets
|
499.8
|
|
427.6
|
Property, Plant and
Equipment, net
|
163.9
|
|
168.1
|
Operating Lease
Right of Use Assets
|
30.6
|
|
38.6
|
Goodwill
|
819.4
|
|
801.6
|
Other Intangible
Assets, net
|
251.0
|
|
141.2
|
Deferred Tax
Assets
|
4.6
|
|
10.0
|
Other
Assets
|
17.6
|
|
16.5
|
TOTAL
ASSETS
|
$
1,786.9
|
|
$
1,603.6
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
Liabilities
|
|
|
|
Current portion of
long-term debt
|
$
6.2
|
|
$
—
|
Current portion of
operating lease obligation
|
12.8
|
|
14.7
|
Trade accounts
payable
|
67.9
|
|
56.4
|
Accrued
expenses
|
98.9
|
|
68.1
|
Total Current
Liabilities
|
185.8
|
|
139.2
|
Long-Term
Debt
|
226.3
|
|
130.0
|
Operating Lease
Obligation
|
34.7
|
|
42.8
|
Deferred Tax
Liabilities
|
25.4
|
|
11.9
|
Other Long-Term
Liabilities
|
23.5
|
|
9.1
|
TOTAL
LIABILITIES
|
495.7
|
|
333.0
|
Stockholders'
Equity
|
1,291.2
|
|
1,270.6
|
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY
|
$
1,786.9
|
|
$
1,603.6
|
AVANOS MEDICAL,
INC. CONDENSED CONSOLIDATED CASH FLOW
STATEMENTS (unaudited) (in
millions)
|
|
|
Three Months Ended
December 31,
|
|
Year Ended December
31,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Operating
Activities
|
|
|
|
|
|
|
|
Net income
|
$
16.9
|
|
$
11.5
|
|
$
50.5
|
|
$
6.3
|
Depreciation and
amortization
|
13.4
|
|
9.5
|
|
47.7
|
|
38.3
|
Net loss on asset
dispositions and asset impairments
|
1.1
|
|
3.1
|
|
1.1
|
|
8.0
|
Changes in operating
assets and liabilities
|
(1.6)
|
|
12.7
|
|
(24.3)
|
|
24.5
|
Deferred income taxes
and other
|
3.9
|
|
15.4
|
|
15.9
|
|
10.2
|
Cash Provided by
Operating Activities
|
33.7
|
|
52.2
|
|
90.9
|
|
87.3
|
Investing
Activities
|
|
|
|
|
|
|
|
Capital
expenditures
|
(4.9)
|
|
(4.8)
|
|
(19.3)
|
|
(21.0)
|
Acquisition of assets
and investments in businesses
|
—
|
|
—
|
|
(116.1)
|
|
—
|
Cash Used in
Investing Activities
|
(4.9)
|
|
(4.8)
|
|
(135.4)
|
|
(21.0)
|
Financing
Activities
|
|
|
|
|
|
|
|
Proceeds from issuance
of secured debt
|
—
|
|
—
|
|
250.0
|
|
—
|
Secured debt
repayments
|
(1.6)
|
|
—
|
|
(126.6)
|
|
—
|
Revolving credit
facility proceeds
|
—
|
|
—
|
|
150.0
|
|
20.0
|
Revolving credit
facility repayments
|
(20.0)
|
|
(15.0)
|
|
(170.0)
|
|
(70.0)
|
Purchase of treasury
stock
|
(0.4)
|
|
(10.9)
|
|
(45.5)
|
|
(11.5)
|
Payment of debt
issuance costs
|
—
|
|
—
|
|
(2.9)
|
|
—
|
Proceeds from the
exercise of stock options
|
0.1
|
|
0.1
|
|
1.7
|
|
6.2
|
Cash (Used in)
Provided by Financing Activities
|
(21.9)
|
|
(25.8)
|
|
56.7
|
|
(55.3)
|
Effect of Exchange
Rate Changes on Cash and Cash Equivalents
|
3.8
|
|
(0.9)
|
|
(3.0)
|
|
(4.0)
|
Increase in Cash and
Cash Equivalents
|
10.7
|
|
20.7
|
|
9.2
|
|
7.0
|
Cash and Cash
Equivalents - Beginning of Period
|
117.0
|
|
97.8
|
|
118.5
|
|
111.5
|
Cash and Cash
Equivalents - End of Period
|
$
127.7
|
|
$
118.5
|
|
$
127.7
|
|
$
118.5
|
AVANOS MEDICAL,
INC. SELECTED BUSINESS AND PRODUCTS
DATA (unaudited) (in millions)
|
|
|
Three Months Ended
December 31,
|
|
|
|
Year Ended December
31,
|
|
|
|
2022
|
|
2021
|
|
Change
|
|
2022
|
|
2021
|
|
Change
|
Chronic
Care:
|
|
|
|
|
|
|
|
|
|
|
|
Digestive
health
|
$
92.9
|
|
$ 86.8
|
|
7.0 %
|
|
$
340.4
|
|
$
322.2
|
|
5.6 %
|
Respiratory
health
|
35.9
|
|
38.8
|
|
(7.5) %
|
|
135.9
|
|
157.6
|
|
(13.8) %
|
Total Chronic
Care
|
128.8
|
|
125.6
|
|
2.5 %
|
|
476.3
|
|
479.8
|
|
(0.7) %
|
Pain
Management:
|
|
|
|
|
|
|
|
|
|
|
|
Acute pain
|
41.3
|
|
41.1
|
|
0.5 %
|
|
160.1
|
|
162.7
|
|
(1.6) %
|
Interventional
pain
|
47.4
|
|
26.7
|
|
77.5 %
|
|
183.6
|
|
102.1
|
|
79.8 %
|
Total Pain
Management
|
88.7
|
|
67.8
|
|
30.8 %
|
|
343.7
|
|
264.8
|
|
29.8 %
|
Total Net
sales
|
$
217.5
|
|
$
193.4
|
|
12.5 %
|
|
$
820.0
|
|
$
744.6
|
|
10.1 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
Volume
|
|
Pricing/Mix
|
|
Currency
|
|
Other
|
|
|
Net Sales - percentage
change - QTD
|
12.5 %
|
|
13.6 %
|
|
0.8 %
|
|
(2.0) %
|
|
— %
|
|
|
Net Sales - percentage
change - YTD
|
10.1 %
|
|
11.3 %
|
|
0.7 %
|
|
(1.9) %
|
|
— %
|
|
|
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SOURCE Avanos Medical, Inc.