CONMED Corporation Announces First Quarter 2007 Financial Results.Sales Increase 7.9% to $171.0 Million: A New Quarterly Record Non-GAAP EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. Grows 43% to $0.30 Non-GAAP Operating Margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: Improves to 10.4% Conference Call to be Held at 10:00 a.m. ET Today UTICA, N.Y. -- CONMED Corporation (Nasdaq: CNMD) today announced financial results for the first quarter of 2007. Sales for the March 31, 2007 quarter increased 7.9% to $171.0 million, setting a new quarterly record, compared to $158.5 million in the first quarter of 2006. Excluding unusual gains and charges (see attached schedule for additional information), non-GAAP net income for the first quarter increased 44% to $8.5 million, or $0.30 per diluted share, compared to first quarter 2006 non-GAAP net income of $5.9 million, or $0.21 per diluted share. The increase was driven by solid top-line growth and continued leverage of CONMED's infrastructure. Non-GAAP figures for the first quarter 2007 exclude a litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. settlement gain, other unusual charges, and, for the first quarter in 2006, transition costs related to an acquisition. On a GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). basis, the Company's net income in the first quarter of 2007 grew more than two and one-half times to $11.9 million or $0.42 per share compared to net income of $4.3 million, or $0.15 per share in first quarter of 2006. "CONMED's first quarter operating performance exceeded our expectations, continuing the trend set in the last half of 2006. We remain focused on our strategy to improve our revenue base by providing our customers with innovative, high quality, cost-effective medical devices while at the same time expanding the Company's operating margin by more efficiently leveraging our organizational structure  This article has no lead section.To comply with Wikipedia's lead section guidelines, one should be written. ," commented Joseph J. Corasanti, President and Chief Executive Officer. "The evidence of our successful execution of this strategy can be seen in the 7.9% top-line revenue growth and the increase in operating margin to 10.4%, which is 190 basis points greater than the same period last year, excluding unusual gains and charges. In addition, we continue to generate positive cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses , enabling us to reduce debt and improve the strength of our balance sheet. These results are the product of the profit improvement plans we initiated in 2006, and which we are confident will continue to improve our overall performance throughout the remainder of 2007," added Mr. Corasanti. As previously disclosed, on March 31, 2007 the Company settled litigation against Johnson & Johnson and related subsidiaries for a payment from Johnson & Johnson of $11.0 million. The litigation challenged marketing practices of Johnson & Johnson pertaining to certain endomechanical surgical products that compete with similar products of the Company. Net of legal and related costs, a gain of $6.1 million has been recorded as an unusual item in the first quarter of 2007. In addition to this gain, the Company also recorded in the first quarter of 2007 unusual charges for the previously disclosed closure of a manufacturing location and the surgical light replacement program. See the attached reconciliation of GAAP to non-GAAP net income for further discussion. Sales outside the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. were $71.4 million in the first quarter of 2007, growing 17.0% overall and 12.5% on a constant currency basis compared to the first quarter of 2006. International sales in the March 2007 quarter were 41.8% of the Company's total sales compared to 38.5% of sales in the first quarter last year. CONMED's cash flow was strong in the first quarter of 2007, enabling a reduction in the senior credit borrowings of $7.8 million. Cash from operations was $11.2 million resulting in operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. per share (a non-GAAP measurement which management believes is useful to understanding the business) of $0.39 in the first quarter of 2007. Following is a summary of the Company's sales by product line for the three months ended March 31, 2007 (in millions): [TABLE OMITTED] The Company's sports medicine sports medicine, branch of medicine concerned with physical fitness and with the treatment and prevention of injuries and other disorders related to sports. Knee, leg, back, and shoulder injuries; stiffness and pain in joints; tendinitis; "tennis elbow"; and Arthroscopy Arthroscopy Definition Arthroscopy is the examination of a joint, specifically, the inside structures. The procedure is performed by inserting a specifically designed illuminated device into the joint through a small incision. line grew 13.7% over first quarter 2006 on the continued strength of video imaging sales, including the first sales of our High Definition (HD) systems. Arthroscopy also benefited from solid performance from our procedure specific tissue repair devices. Powered Surgical Instruments A surgical instrument is a specially designed tool or device for performing specific actions of carrying out desired effects during a surgery or operation, such as modifying biological tissue, or to provide access or viewing it. continued to demonstrate sales acceleration by growing 9.9%, primarily as a result of continued sales momentum for our MPower[R] and MicroPower[R] platform products introduced in 2006. Electrosurgery electrosurgery /elec·tro·sur·gery/ (-ser´jer-e) surgery performed by electrical methods; the active electrode may be a needle, bulb, or disk.electrosur´gical e·lec·tro·sur·ger·y n. sales produced year-over-year growth at a rate consistent with what we expect going forward following extraordinarily strong fourth quarter growth of 18.6%, while Endosurgery increased 14.3% with strong growth internationally. Patient Care grew at a rate consistent with the market. The Endoscopic en·do·scope n. An instrument for examining visually the interior of a bodily canal or a hollow organ such as the colon, bladder, or stomach. en Technologies line, accounting for approximately 8% of the Company's sales during the quarter, experienced a revenue decline in the first quarter due to previously disclosed production matters at an assembly operation in Mexico. Management has taken corrective action A corrective action is a change implemented to address a weakness identified in a management system. Normally corrective actions are instigated in response to a customer complaint, abnormal levels if internal nonconformity, nonconformities identified during an internal audit or to address the issues associated with the product shortages that the Company previously identified and disclosed in the third quarter of 2006. Management expects that shortages for this product line may continue through the second quarter of 2007. Outlook Mr. Corasanti noted, "For the upcoming second quarter of 2007, we anticipate revenues in the range of $168-$172 million and non-GAAP diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of (excluding unusual charges) of $0.28 - $0.32. For the full year of 2007, we reiterate the forecast previously provided. We foresee 2007 constant currency sales growing approximately 5% over 2006 sales with the resulting diluted earnings per share approximating $1.20 - $1.30, excluding unusual items." Conference Call The Company will webcast its first quarter 2007 conference call live over the Internet on Thursday, April 26, 2007 at 10:00 a.m. Eastern Time. This broadcast can be accessed from CONMED's web site at www.conmed.com. Replays of the call will be made available through May 3, 2007. CONMED Profile CONMED is a medical technology company with an emphasis on surgical devices and equipment for minimally invasive procedures and monitoring. The Company's products serve the clinical areas of arthroscopy, powered surgical instruments, electrosurgery, cardiac monitoring disposables, endosurgery and endoscopic technologies. They are used by surgeons and physicians in a variety of specialties including orthopedics, general surgery, gynecology, neurosurgery neurosurgery /neu·ro·sur·gery/ (noor´o-sur?jer-e) surgery of the nervous system. neu·ro·sur·ger·y n. Surgery on any part of the nervous system. , and gastroenterology gastroenterology Medical specialty dealing with digestion and the digestive system. In the 17th century Jan Baptista van Helmont conducted the first scientific studies in the field; William Beaumont published his own observations in 1833. . Headquartered in Utica, New York
Forward Looking Information This press release contains forward-looking statements based on certain assumptions and contingencies that involve risks and uncertainties. The forward-looking statements are made pursuant to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 and relate to the Company's performance on a going-forward basis. The forward-looking statements in this press release 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. 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. In addition to general industry and economic conditions, factors that could cause actual results to differ materially from those discussed in the forward-looking statements in this press release include, but are not limited to: (i) the failure of any one or more of the assumptions stated above, to prove to be correct; (ii) the risks relating to forward-looking statements discussed in the Company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the fiscal year ended December 31, 2006; (iii) cyclical purchasing patterns from customers, end-users and dealers; (iv) timely release of new products, and acceptance of such new products by the market; (v) the introduction of new products by competitors and other competitive responses; (vi) the possibility that any new acquisition or other transaction may require the Company to reconsider its financial assumptions and goals/targets; and/or (vii) the Company's ability to devise and execute strategies to respond to market conditions. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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