CONMED Corporation (NYSE: CNMD) today announced financial results for the first quarter ended March 31, 2023.
“I am proud of our team for driving excellent first quarter results and staying focused on serving our customers”Tweet this
First Quarter 2023 Highlights
- Sales of $295.5 million increased 21.9% year over year as reported and 25.1% in constant currency. Acquisitions contributed approximately 570 basis points of growth.
- Domestic revenue increased 25.4% year over year.
- International revenue increased 17.8% year over year as reported and 24.7% in constant currency.
- Diluted net earnings per share (GAAP) were $0.06, a decrease of 87.2% compared to the first quarter of 2022.
- Adjusted diluted net earnings per share(1) were $0.66, a decrease of 5.7% compared to the first quarter of 2022.
“I am proud of our team for driving excellent first quarter results and staying focused on serving our customers,” commented Curt R. Hartman, CONMED’s Chair of the Board, President, and Chief Executive Officer. “Our strong first quarter provides a very solid start to the year, and the team is focused on execution and delivering on our increased outlook.”
2023 Outlook
Based on the first quarter results, the Company is raising its revenue guidance for the full year 2023 and now expects revenue between $1.205 billion and $1.250 billion, compared to its prior guidance of between $1.170 billion and $1.220 billion. This range continues to include an expected headwind from foreign exchange of between 150 and 200 basis points.
The Company now expects full-year 2023 adjusted diluted net earnings per share(2) in the range of $3.30 to $3.50, compared to its prior range of $3.20 to $3.45. This range continues to include an expected headwind from foreign exchange of between $0.20 and $0.25.
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.
(2) Information reconciling forward-looking adjusted diluted net earnings per share to the comparable GAAP financial measures is unavailable to the company without unreasonable effort, as discussed below.
Conference Call
The Company’s management will host a conference call today at 4:30 p.m. ET to discuss its first quarter 2023 results.
To participate in the conference call via telephone, please click here to pre-register and obtain the dial-in number and passcode.
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.
| Consolidated Condensed Statements of Income | ||||||
| (in thousands except per share amounts, unaudited) | ||||||
| Three Months Ended | ||||||
| March 31, | ||||||
| 2023 | 2022 | |||||
| Net sales | $ | 295,468 | $ | 242,327 | ||
| Cost of sales | 140,147 | 106,336 | ||||
| Gross profit | 155,321 | 135,991 | ||||
| % of sales | 52.6 | % | 56.1 | % | ||
| Selling & administrative expense | 130,083 | 102,875 | ||||
| Research & development expense | 12,539 | 10,672 | ||||
| Income from operations | 12,699 | 22,444 | ||||
| % of sales | 4.3 | % | 9.3 | % | ||
| Interest expense | 10,255 | 4,998 | ||||
| Income before income taxes | 2,444 | 17,446 | ||||
| Provision for income taxes | 625 | 2,471 | ||||
| Net income | $ | 1,819 | $ | 14,975 | ||
| Basic EPS | $ | 0.06 | $ | 0.51 | ||
| Diluted EPS | 0.06 | 0.47 | ||||
| Basic shares | 30,511 | 29,428 | ||||
| Diluted shares | 31,204 | 35,155 | ||||
| Sales Summary | |||||||||||||||||||||||
| (in millions, unaudited) | |||||||||||||||||||||||
| Three Months Ended March 31, | |||||||||||||||||||||||
| % Change | |||||||||||||||||||||||
| Domestic | International | ||||||||||||||||||||||
| 2023 | 2022 | AsReported | ImpactofForeignCurrency | ConstantCurrency | AsReported | AsReported | ImpactofForeignCurrency | ConstantCurrency | |||||||||||||||
| Orthopedic Surgery | $ | 131.2 | $ | 107.5 | 22.0 | % | 4.0 | % | 26.0 | % | 29.0 | % | 18.2 | % | 6.1 | % | 24.3 | % | |||||
| General Surgery | 164.3 | 134.8 | 21.9 | % | 2.5 | % | 24.4 | % | 24.0 | % | 17.1 | % | 8.4 | % | 25.5 | % | |||||||
| $ | 295.5 | $ | 242.3 | 21.9 | % | 3.2 | % | 25.1 | % | 25.4 | % | 17.8 | % | 6.9 | % | 24.7 | % | ||||||
| Single-use Products | $ | 249.3 | $ | 201.5 | 23.7 | % | 3.2 | % | 26.9 | % | 28.9 | % | 17.3 | % | 7.1 | % | 24.4 | % | |||||
| Capital Products | 46.2 | 40.8 | 13.0 | % | 3.3 | % | 16.3 | % | 5.5 | % | 19.8 | % | 6.2 | % | 26.0 | % | |||||||
| $ | 295.5 | $ | 242.3 | 21.9 | % | 3.2 | % | 25.1 | % | 25.4 | % | 17.8 | % | 6.9 | % | 24.7 | % | ||||||
| Domestic | $ | 164.6 | $ | 131.2 | 25.4 | % | 0.0 | % | 25.4 | % | |||||||||||||
| International | 130.9 | 111.1 | 17.8 | % | 6.9 | % | 24.7 | % | |||||||||||||||
| $ | 295.5 | $ | 242.3 | 21.9 | % | 3.2 | % | 25.1 | % | ||||||||||||||
| Reconciliation of Reported Net Income to Adjusted Net Income | |||||||||||||||||||||||||
| (in thousands, except per share amounts, unaudited) | |||||||||||||||||||||||||
| Three Months Ended March 31, 2023 | |||||||||||||||||||||||||
| GrossProfit | Selling &AdministrativeExpense | OperatingIncome | InterestExpense | TaxExpense | EffectiveTax Rate | NetIncome | BasicEPS | Adjustments | DilutedEPS | ||||||||||||||||
| As reported | $ | 155,321 | $ | 130,083 | $ | 12,699 | $ | 10,255 | $ | 625 | 25.6 | % | $ | 1,819 | $ | – | $ | 1,819 | |||||||
| % of sales | 52.6 | % | 44.0 | % | 4.3 | % | |||||||||||||||||||
| EPS | $ | 0.06 | $ | 0.06 | |||||||||||||||||||||
| Shares | 30,511 | 693 | 31,204 | ||||||||||||||||||||||
| Acquisition and integration costs(1) | 2,096 | (448 | ) | 2,544 | – | 654 | 1,890 | ||||||||||||||||||
| Restructuring and related costs(2) | 2,035 | (1,578 | ) | 3,613 | – | 930 | 2,683 | ||||||||||||||||||
| Software implementation costs(3) | – | (4,259 | ) | 4,259 | – | 1,096 | 3,163 | ||||||||||||||||||
| Contingent consideration fair value adjustments(4) | – | (4,436 | ) | 4,436 | – | 1,141 | 3,295 | ||||||||||||||||||
| $ | 159,452 | $ | 119,362 | $ | 27,551 | $ | 10,255 | $ | 4,446 | $ | 12,850 | ||||||||||||||
| Adjusted gross profit % | 54.0 | % | |||||||||||||||||||||||
| Amortization(5) | $ | 1,500 | (7,265 | ) | 8,765 | (1,506 | ) | 2,530 | 7,741 | ||||||||||||||||
| As adjusted | $ | 112,097 | $ | 36,316 | $ | 8,749 | $ | 6,976 | 25.3 | % | $ | 20,591 | $ | – | $ | 20,591 | |||||||||
| % of sales | 37.9 | % | 12.3 | % | |||||||||||||||||||||
| Adjusted diluted EPS | $ | 0.66 | |||||||||||||||||||||||
| Shares | 30,511 | 693 | 31,204 | ||||||||||||||||||||||
| Convertible note hedges(6) | (64 | ) | |||||||||||||||||||||||
| Adjusted diluted shares | 31,140 | ||||||||||||||||||||||||
| Three Months Ended March 31, 2022 | |||||||||||||||||||||||||
| Gross Profit | Selling & Administrative Expense | Operating Income | Interest Expense | Tax Expense | Effective Tax Rate | Net Income | Basic EPS | Adjustments(7) | 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 | |||||||||||||||||||||
| Shares | 29,428 | 5,727 | 35,155 | ||||||||||||||||||||||
| $ | 135,991 | $ | 102,875 | $ | 22,444 | $ | 4,998 | $ | 2,471 | $ | 14,975 | ||||||||||||||
| Adjusted gross profit % | 56.1 | % | |||||||||||||||||||||||
| Amortization(5) | $ | 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 | |||||||||||||||||||||||
| Shares | 29,428 | 5,727 | 35,155 | ||||||||||||||||||||||
| Convertible note hedges(6) | (1,412 | ) | |||||||||||||||||||||||
| Adjusted diluted shares | 33,743 | ||||||||||||||||||||||||
| (1) In 2023, the Company incurred charges related to the amortization of inventory step-up to fair value associated with the acquisition of In2Bones Global, Inc. and integration costs and professional fees associated with the acquisitions of In2Bones Global, Inc. and Biorez, Inc. |
| (2) In 2023, the Company incurred consulting fees related to an operational cost improvement initiative and severance related to the elimination of certain positions. |
| (3) In 2023, the Company incurred additional freight, labor and travel costs as well as professional fees related to the implementation of a warehouse management software. |
| (4) In 2023, the Company incurred expense related to the fair value adjustments to contingent consideration. |
| (5) Includes amortization of intangible assets and deferred financing fees. |
| (6) Non-GAAP adjusted dilutive weighted average shares outstanding exclude dilution that is expected to be offset by the Company’s convertible notes hedge transactions. |
| (7) 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 its convertible notes (net of tax) and the denominator includes additional common shares assuming conversion premium and principal portion of the notes (when permitted or required) are settled in shares. Subsequent to June 6, 2022, the Company is required to settle the principal value of its convertible notes in cash. |
| Reconciliation of Reported Net Income to EBITDA & Adjusted EBITDA | |||||||
| (in thousands, unaudited) | |||||||
| Three Months Ended | |||||||
| March 31, | |||||||
| 2023 | 2022 | ||||||
| Net income | $ | 1,819 | $ | 14,975 | |||
| Provision for income taxes | 625 | 2,471 | |||||
| Interest expense | 10,255 | 4,998 | |||||
| Depreciation | 4,057 | 4,032 | |||||
| Amortization | 13,877 | 12,799 | |||||
| EBITDA | $ | 30,633 | $ | 39,275 | |||
| Stock based compensation | 5,726 | 4,463 | |||||
| Acquisition and integration costs | 2,544 | – | |||||
| Restructuring and related costs | 3,613 | – | |||||
| Software implementation costs | 4,259 | – | |||||
| Contingent consideration fair value adjustments | 4,436 | – | |||||
| Adjusted EBITDA | $ | 51,211 | $ | 43,738 | |||
| EBITDA Margin | |||||||
| EBITDA | 10.4 | % | 16.2 | % | |||
| Adjusted EBITDA | 17.3 | % | 18.0 | ||||
Source: https://www.businesswire.com/
