8-K
CONMED Corp (CNMD)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
October 28, 2020
CONMED CORPORATION
(Exact name of registrant as specified in its charter)
| Delaware | 001-39218 | 16-0977505 |
|---|---|---|
| (State or other jurisdiction of | (Commission File Number) | (I.R.S. Employer |
| incorporation or organization) | Identification No.) |
525 French Road
Utica, New York 13502
(Address of principal executive offices, including zip code)
(315) 797-8375
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions (See General Instruction A.2 below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act
| Title of each class | Trading Symbol(s) | Name of<br> each exchange on which registered |
|---|---|---|
| Common Stock, $0.01 par value | CNMD | NYSE |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02 | Results of Operations and Financial Condition. |
|---|
On October 28, 2020, CONMED Corporation issued a press release announcing financial results for the third quarter ended September 30, 2020. A copy of this press release is attached hereto as Exhibit 99.1.
The information in this Current Report on Form 8-K that is furnished under “Item 2.02. Results of Operations and Financial Condition” and Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Act of 1934, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.
| Item 9.01 | Financial Statements and Exhibits. |
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| (d) | Exhibits |
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The following exhibits are included herewith:
| Exhibit No. | Description of Exhibit |
|---|---|
| 99.1 | Press Release dated October 28, 2020, issued by CONMED<br> Corporation. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: October 28, 2020 | CONMED CORPORATION | |
|---|---|---|
| (Registrant) | ||
| By: | /s/ Todd W. Garner | |
| Name: | Todd W. Garner | |
| Title: | Executive Vice President- | |
| Chief Financial Officer | ||
| NEWS RELEASE | ||
| --- | ||
| CONTACT: | ||
| CONMED Corporation | ||
| Todd Garner | ||
| Chief Financial Officer | ||
| 315-624-3317 | ||
| ToddGarner@conmed.com |
CONMED Corporation Announces Third Quarter2020 Financial Results
Utica, New York, October 28, 2020 --- CONMEDCorporation (NYSE: CNMD) today announced financial results for the third quarter ended September 30, 2020.
Third Quarter 2020 Highlights
| · | Sales of $237.8 million increased 1.8%<br>year over year as reported and in constant currency. |
|---|---|
| · | Domestic revenue increased 4.7% year over<br>year. |
| --- | --- |
| · | International revenue decreased 1.7% as<br>reported and in constant currency. |
| --- | --- |
| · | Diluted net earnings per share (GAAP)<br>was $0.23, which was flat compared to diluted net earnings per share in the third quarter of 2019. |
| --- | --- |
| · | Adjusted diluted net earnings per share^(1)^<br>was $0.88 versus adjusted diluted net earnings per share of $0.62 in the third quarter of 2019. |
| --- | --- |
“Our third quarter results demonstrate our team’s commitment to operational execution in the face of the global COVID-19 environment,” commented Curt R. Hartman, CONMED’s President, Chief Executive Officer and Chair of the Board. “During the quarter, we generated continued positive momentum within our business despite ongoing geographic variability in procedure volumes as a result of pandemic-related disruptions. I remain confident that our team’s outstanding commitment to serving our customers and our continued expense discipline keep us well positioned to achieve profitable above-market growth over the long term.”
2020 Outlook
Due to the continued uncertainty created by the COVID-19 pandemic, management is unable to provide financial guidance at this time.
Supplemental Financial Disclosures
^(1)^ A reconciliation of reported diluted net earnings (loss) 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 third quarter 2020 results.
To participate in the conference call, dial 1-844-889-7792 (domestic) or +1-661-378-9936 (international) and refer to the passcode 2498889.
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, October 28, 2020, until 7:30 p.m. ET on Wednesday, November 4, 2020. To hear this recording, dial 1-855-859-2056 (domestic) or +1-404-537-3406 (international) and enter the passcode 2498889.
Consolidated Condensed Statements of Income(Loss)
(in thousands, except per share amounts, unaudited)
| Three Months Ended | Nine Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| September 30, | September 30, | ||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||
| Net sales | $ | 237,835 | $ | 233,590 | $ | 609,631 | $ | 690,232 | |
| Cost of sales | 104,137 | 103,479 | 284,845 | 307,492 | |||||
| Gross profit | 133,698 | 130,111 | 324,786 | 382,740 | |||||
| % of sales | 56.2% | 55.7% | 53.3% | 55.5% | |||||
| Selling & administrative expense | 94,380 | 98,187 | 274,721 | 298,140 | |||||
| Research & development expense | 9,936 | 10,985 | 28,756 | 33,366 | |||||
| Income from operations | 29,382 | 20,939 | 21,309 | 51,234 | |||||
| % of sales | 12.4% | 9.0% | 3.5% | 7.4% | |||||
| Interest expense | 11,943 | 11,174 | 32,938 | 32,382 | |||||
| Other expense | 89 | 321 | 266 | 4,867 | |||||
| Income (loss) before income taxes | 17,350 | 9,444 | (11,895 | ) | 13,985 | ||||
| Provision for income taxes | 10,500 | 2,474 | 2,728 | 299 | |||||
| Net income (loss) | $ | 6,850 | $ | 6,970 | $ | (14,623 | ) | $ | 13,686 |
| Basic EPS | $ | 0.24 | $ | 0.25 | $ | (0.51 | ) | $ | 0.48 |
| Diluted EPS | 0.23 | 0.23 | (0.51 | ) | 0.47 | ||||
| Basic shares | 28,583 | 28,353 | 28,529 | 28,280 | |||||
| Diluted shares | 29,426 | 29,792 | 28,529 | 29,354 |
Sales Summary
(in millions, unaudited)
| Three Months Ended September 30, | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| % Change | ||||||||||||||||||
| Domestic | International | |||||||||||||||||
| 2020 | 2019 | As<br><br> Reported | Impact <br><br>of<br><br> Foreign <br><br>Currency | Constant<br><br> Currency | As<br><br> Reported | As <br><br>Reported | Impact <br><br>of <br><br>Foreign <br><br>Currency | Constant <br><br>Currency | ||||||||||
| Orthopedic Surgery | $ | 102.2 | $ | 110.3 | -7.4% | 0.3% | -7.1% | -8.5% | -6.7% | 0.5% | -6.2% | |||||||
| General Surgery | 135.6 | 123.3 | 10.0% | -0.2% | 9.8% | 11.3% | 7.3% | -0.9% | 6.4% | |||||||||
| $ | 237.8 | $ | 233.6 | 1.8% | 0.0% | 1.8% | 4.7% | -1.7% | 0.0% | -1.7% | ||||||||
| Single-use Products | $ | 190.9 | $ | 184.4 | 3.6% | 0.0% | 3.6% | 6.3% | 0.1% | 0.1% | 0.2% | |||||||
| Capital Products | 46.9 | 49.2 | -4.7% | -0.2% | -4.9% | -2.0% | -7.4% | -0.5% | -7.9% | |||||||||
| $ | 237.8 | $ | 233.6 | 1.8% | 0.0% | 1.8% | 4.7% | -1.7% | 0.0% | -1.7% | ||||||||
| Domestic | $ | 134.2 | $ | 128.2 | 4.7% | 0.0% | 4.7% | |||||||||||
| International | 103.6 | 105.4 | -1.7% | 0.0% | -1.7% | |||||||||||||
| $ | 237.8 | $ | 233.6 | 1.8% | 0.0% | 1.8% | ||||||||||||
| Nine Months Ended September 30, | ||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| % Change | ||||||||||||||||||
| Domestic | International | |||||||||||||||||
| 2020 | 2019 | As<br><br> Reported | Impact <br><br>of <br><br>Foreign <br><br>Currency | Constant<br><br> Currency | As<br><br> Reported | As<br><br> Reported | Impact<br><br> of<br><br> Foreign <br><br>Currency | Constant <br><br>Currency | ||||||||||
| Orthopedic Surgery | $ | 261.9 | $ | 339.5 | -22.8% | 1.2% | -21.6% | -25.8% | -21.0% | 2.0% | -19.0% | |||||||
| General Surgery | 347.7 | 350.7 | -0.9% | 0.4% | -0.5% | 0.0% | -2.9% | 1.2% | -1.7% | |||||||||
| $ | 609.6 | $ | 690.2 | -11.7% | 0.9% | -10.8% | -9.0% | -14.8% | 1.7% | -13.1% | ||||||||
| Single-use Products | $ | 497.1 | $ | 547.0 | -9.1% | 0.9% | -8.2% | -5.5% | -13.6% | 1.9% | -11.7% | |||||||
| Capital Products | 112.5 | 143.2 | -21.5% | 0.7% | -20.8% | -24.4% | -18.8% | 1.4% | -17.4% | |||||||||
| $ | 609.6 | $ | 690.2 | -11.7% | 0.9% | -10.8% | -9.0% | -14.8% | 1.7% | -13.1% | ||||||||
| Domestic | $ | 340.5 | $ | 374.1 | -9.0% | 0.0% | -9.0% | |||||||||||
| International | 269.1 | 316.1 | -14.8% | 1.7% | -13.1% | |||||||||||||
| $ | 609.6 | $ | 690.2 | -11.7% | 0.9% | -10.8% |
Reconciliation of Reported Net Income toAdjusted Net Income
(in thousands, except per share amounts, unaudited)
| Three Months Ended September 30, 2020 | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Gross Profit | Selling & <br><br>Administrative <br><br>Expense | Operating <br><br>Income | Interest <br> Expense | Other<br><br> Expense | Tax<br> Expense/<br><br> (Benefit) | Effective <br><br>Tax Rate | Net<br><br> Income | Diluted<br><br> EPS | |||||||||||||
| As reported | $ | 133,698 | $ | 94,380 | $ | 29,382 | $ | 11,943 | $ | 89 | $ | 10,500 | 60.5% | $ | 6,850 | $ | 0.23 | ||||
| % of sales | 56.2% | 39.7% | 12.4% | ||||||||||||||||||
| Restructuring and related costs ^(1)^ | — | (1,009 | ) | 1,009 | — | — | (87 | ) | 1,096 | 0.04 | |||||||||||
| Acquisition and integration costs ^(2)^ | 796 | — | 796 | — | — | (366 | ) | 1,162 | 0.04 | ||||||||||||
| Manufacturing consolidation costs ^(3)^ | 606 | — | 606 | — | — | (352 | ) | 958 | 0.03 | ||||||||||||
| $ | 135,100 | $ | 93,371 | $ | 31,793 | $ | 11,943 | $ | 89 | $ | 9,695 | $ | 10,066 | $ | 0.34 | ||||||
| Adjusted gross profit % | 56.8% | ||||||||||||||||||||
| Amortization^(4)^ | $ | 1,500 | (6,992 | ) | 8,492 | (3,439 | ) | — | (3,980 | ) | 15,911 | 0.54 | |||||||||
| Adjusted net income | $ | 86,379 | $ | 40,285 | $ | 8,504 | $ | 89 | $ | 5,715 | 18.0% | $ | 25,977 | $ | 0.88 | ||||||
| % of sales | 36.3% | 16.9% | |||||||||||||||||||
| Three Months Ended September 30, 2019 | |||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Gross Profit | Selling & <br><br>Administrative <br><br>Expense | Operating <br><br>Income | Interest <br> Expense | Other<br><br> Expense | Tax<br> Expense | Effective<br><br> Tax Rate | Net <br><br>Income | Diluted<br><br> EPS | |||||||||||||
| As reported | $ | 130,111 | $ | 98,187 | $ | 20,939 | $ | 11,174 | $ | 321 | $ | 2,474 | 26.2% | $ | 6,970 | $ | 0.23 | ||||
| % of sales | 55.7% | 42.0% | 9.0% | ||||||||||||||||||
| Acquisition and integration costs ^(2)^ | 171 | (1,490 | ) | 1,661 | — | — | 290 | 1,371 | 0.05 | ||||||||||||
| Manufacturing consolidation costs ^(3)^ | 1,430 | — | 1,430 | — | — | 249 | 1,181 | 0.04 | |||||||||||||
| $ | 131,712 | $ | 96,697 | $ | 24,030 | $ | 11,174 | $ | 321 | $ | 3,013 | $ | 9,522 | $ | 0.32 | ||||||
| Adjusted gross profit % | 56.4% | ||||||||||||||||||||
| Amortization^(4)^ | $ | 1,500 | (6,841 | ) | 8,341 | (3,183 | ) | — | 2,808 | 8,716 | 0.30 | ||||||||||
| Adjusted net income | $ | 89,856 | $ | 32,371 | $ | 7,991 | $ | 321 | $ | 5,821 | 24.2% | $ | 18,238 | $ | 0.62 | ||||||
| % of sales | 38.5% | 13.9% | |||||||||||||||||||
| Diluted shares | 29,792 | ||||||||||||||||||||
| In-the-money portion of convertible notes^(5)^ | (204 | ) | |||||||||||||||||||
| Diluted shares, as adjusted | 29,588 |
(1) In 2020, the Company incurred costs related to restructuring of the Orthopedic sales force consisting primarily of termination payments to distributors made in exchange for ongoing assistance to transition to employee-based sales representatives.
(2) In 2020, the Company incurred inventory adjustments associated with a prior acquisition. In 2019, the Company incurred inventory adjustments, consulting fees, legal fees, severance and integration related costs associated with the acquisition of Buffalo Filter, LLC.
(3) In 2020 and 2019, the Company incurred costs related to the consolidation of certain manufacturing operations. These costs related to winding down operations at certain locations and moving production lines to other facilities.
(4) Includes amortization of intangible assets, deferred financing fees and debt discount.
(5) In Q3 2019, the Company’s average share price exceeded the conversion price of its 2.625% convertible notes due in 2024 (the "Notes"). Non-GAAP adjusted dilutive weighted average shares outstanding exclude dilution that is expected to be offset by the Company’s convertible note hedge transactions.
Reconciliation of Reported Net Income (Loss)to Adjusted Net Income
(in thousands, except per share amounts, unaudited)
| Nine Months Ended September 30, 2020 | |||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Gross<br><br> Profit | Selling & <br><br>Administrative <br><br>Expense | Operating<br><br> Income | Interest <br> Expense | Other <br><br>Expense | Tax<br> Expense | Effective<br><br> Tax Rate | Net <br><br>Income<br><br> (Loss) | Diluted<br><br> EPS | |||||||||||||||
| As reported | $ | 324,786 | $ | 274,721 | $ | 21,309 | $ | 32,938 | $ | 266 | $ | 2,728 | -22.9% | $ | (14,623 | ) | $ | (0.51 | ) | ||||
| % of sales | 53.3% | 45.1% | 3.5% | ||||||||||||||||||||
| Plant underutilization costs ^(1)^ | 6,586 | — | 6,586 | — | — | 739 | 5,847 | 0.20 | |||||||||||||||
| Product rationalization costs ^(2)^ | 2,169 | (2,095 | ) | 4,264 | — | — | 460 | 3,804 | 0.13 | ||||||||||||||
| Restructuring and related costs ^(3)^ | 1,087 | (3,133 | ) | 4,220 | — | — | 259 | 3,961 | 0.14 | ||||||||||||||
| Acquisition and integration costs ^(4)^ | 2,253 | (1,192 | ) | 3,445 | — | — | 356 | 3,089 | 0.11 | ||||||||||||||
| Manufacturing consolidation costs ^(5)^ | 3,993 | — | 3,993 | — | — | 485 | 3,508 | 0.12 | |||||||||||||||
| $ | 340,874 | $ | 268,301 | $ | 43,817 | $ | 32,938 | $ | 266 | $ | 5,027 | $ | 5,586 | $ | 0.19 | ||||||||
| Adjusted gross profit % | 55.9% | ||||||||||||||||||||||
| Amortization^(6)^ | $ | 4,500 | (20,947 | ) | 25,447 | (9,936 | ) | — | 1,795 | 33,588 | 1.14 | ||||||||||||
| Adjusted net income | $ | 247,354 | $ | 69,264 | $ | 23,002 | $ | 266 | $ | 6,822 | 14.8% | $ | 39,174 | $ | 1.33 | ||||||||
| % of sales | 40.6% | 11.4% | |||||||||||||||||||||
| Diluted shares, as reported | 28,529 | ||||||||||||||||||||||
| Effect of dilutive shares assuming net earnings^(7)^ | 859 | ||||||||||||||||||||||
| Diluted shares, as adjusted | 29,388 | ||||||||||||||||||||||
| Nine Months Ended September 30, 2019 | |||||||||||||||||||||||
| Gross<br><br> Profit | Selling & <br><br>Administrative <br><br>Expense | Operating<br><br> Income | Interest <br> Expense | Other<br><br> Expense | Tax<br> Expense | Effective <br><br>Tax Rate | Net <br><br>Income | Diluted<br><br> EPS | |||||||||||||||
| As reported | $ | 382,740 | $ | 298,140 | $ | 51,234 | $ | 32,382 | $ | 4,867 | $ | 299 | 2.1% | $ | 13,686 | $ | 0.47 | ||||||
| % of sales | 55.5% | 43.2% | 7.4% | ||||||||||||||||||||
| Acquisition and integration costs ^(4)^ | 1,335 | (11,196 | ) | 12,531 | — | — | 3,473 | 9,058 | 0.31 | ||||||||||||||
| Manufacturing consolidation costs ^(5)^ | 1,430 | — | 1,430 | — | — | 249 | 1,181 | 0.04 | |||||||||||||||
| Debt refinancing costs ^(8)^ | — | — | — | — | (3,904 | ) | 1,149 | 2,755 | 0.09 | ||||||||||||||
| $ | 385,505 | $ | 286,944 | $ | 65,195 | $ | 32,382 | $ | 963 | $ | 5,170 | $ | 26,680 | $ | 0.91 | ||||||||
| Adjusted gross profit % | 55.9% | ||||||||||||||||||||||
| Amortization^(6)^ | $ | 4,500 | (19,436 | ) | 23,936 | (8,573 | ) | — | 8,056 | 24,453 | 0.83 | ||||||||||||
| Adjusted net income | $ | 267,508 | $ | 89,131 | $ | 23,809 | $ | 963 | $ | 13,226 | 20.6% | $ | 51,133 | $ | 1.74 | ||||||||
| % of sales | 38.8% | 12.9% |
(1) In 2020, the Company incurred a charge related to plant underutilization due to abnormally low production as a result of decreased sales caused by the COVID-19 pandemic.
(2) In 2020, the Company performed an analysis of product lines and determined certain catalog numbers, principally related to capital equipment, would be discontinued and consolidated into existing product offerings resulting in a charge to cost of sales. The Company also wrote-off related field inventory used for customer demonstration and evaluation of the discontinued products to selling and administrative expense.
(3) In 2020, the Company incurred restructuring costs related to a voluntary separation arrangement with employees as a result of the COVID-19 pandemic. In 2020, the Company also incurred costs related to restructuring of the Orthopedic sales force consisting primarily of termination payments to distributors made in exchange for ongoing assistance to transition to employee-based sales representatives.
(4) In 2020, the Company incurred inventory adjustments associated with a prior acquisition and severance and integration costs mainly related to the Buffalo Filter, LLC acquisition. In 2019, the Company incurred inventory adjustments, investment banking fees, consulting fees, legal fees, severance and integration related costs associated with the acquisition of Buffalo Filter, LLC.
(5) In 2020 and 2019, the Company incurred costs related to the consolidation of certain manufacturing operations. These costs related to winding down operations at certain locations and moving production lines to other facilities.
(6) Includes amortization of intangible assets, deferred financing fees and debt discount.
(7) Diluted share count used in Diluted EPS, as adjusted, for the nine months ended September 30, 2020 adjusts for shares assuming net earnings.
(8) In 2019, in conjunction with the acquisition of Buffalo Filter, LLC, the Company refinanced its existing credit facility and incurred one-time fees associated with an agreement between the Company and JP Morgan Chase Bank, N.A., as well as costs associated with the early extinguishment of debt.
Reconciliation of Reported Net Income (Loss)to EBITDA & Adjusted EBITDA
(in thousands, unaudited)
| Three Months Ended | Nine Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| September 30, | September 30, | ||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||
| Net income (loss) | $ | 6,850 | $ | 6,970 | $ | (14,623 | ) | $ | 13,686 |
| Provision from income taxes | 10,500 | 2,474 | 2,728 | 299 | |||||
| Interest expense | 11,943 | 11,174 | 32,938 | 32,382 | |||||
| Depreciation | 4,383 | 5,258 | 13,617 | 14,225 | |||||
| Amortization | 13,580 | 13,377 | 40,973 | 38,837 | |||||
| EBITDA | $ | 47,256 | $ | 39,253 | $ | 75,633 | $ | 99,429 | |
| Stock based compensation | 3,532 | 3,008 | 10,119 | 8,819 | |||||
| Plant underutilization costs | — | — | 6,586 | — | |||||
| Product rationalization costs | — | — | 4,264 | — | |||||
| Restructuring and related costs | 1,009 | — | 4,220 | — | |||||
| Manufacturing consolidation costs | 606 | 1,430 | 3,993 | 1,430 | |||||
| Acquisition and integration costs | 796 | 1,661 | 3,445 | 12,531 | |||||
| Debt refinancing costs | — | — | — | 3,904 | |||||
| Adjusted EBITDA | $ | 53,199 | $ | 45,352 | $ | 108,260 | $ | 126,113 | |
| EBITDA Margin | |||||||||
| EBITDA | 19.9% | 16.8% | 12.4% | 14.4% | |||||
| Adjusted EBITDA | 22.4% | 19.4% | 17.8% | 18.3% |
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, neurosurgery, thoracic surgery, and gastroenterology. For more information, visit www.conmed.com.
Forward-Looking Statements
This press release and today’s 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, as well as the risk factors discussed in the Company's Annual Report on Form 10-K for the full year ended December 31, 2019, and listed under the heading Forward-LookingStatements in the Company’s most recently filed Form 10-Q. 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 - Reconciliationof GAAP to Non-GAAP Financial Measures
The Company supplements the reporting of its financial information determined under accounting principles generally accepted 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 other 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, other expense, income tax expense, effective income tax rate, net income (loss), diluted shares and diluted net earnings (loss) 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.