Fresenius Medical Care Reports Outstanding Start for 2007 and Confirms Outlook for Full Year.BAD HOMBURG Bad Hom·burg A city of west-central Germany at the foot of the Taunus Mountains near Frankfurt. It is a famous spa and resort. Population: 53,200. , Germany -- Fresenius Medical Care Fresenius Medical Care is a German company specializing in the production of medical supplies, primarily to facilitate or aid renal dialysis. It is 37%-owned by the health care company Fresenius SE. AG & Co. KGaA (NYSE NYSE See: New York Stock Exchange : FMS FMS - Flexible Manufacturing System (factory automation). ) (FWB (Fixed Wireless Broadband) See fixed wireless. : FME FME Formal Methods Europe FME Faculty of Mechanical Engineering (Brno University of Technology, Czech Republic) FME Feature Manipulation Engine FME Facultat de Matemàtiques I Estadística ):
Summary First Quarter 2007: < <
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Net revenue < < $ 2,-
+ 33%
Operating income (EBIT) < < $ 365
+ 50%
Net income < < $ 160
+ 38%
Earnings per share < < $
+ 37%
Fresenius Medical Care AG & Co. KGaA ("the Company"), the world's largest provider of Dialysis Products and Services, today announced its results for the first quarter of 2007. The operations of Renal Care Group (RCG RCG Responsible Conduct of Gambling RCG Revolutionary Communist Group (Northern Ireland) RCG Raiffeisen Central Genossenschaft (German: Raiffeisen Cooperative) RCG Race, Class and Gender ) are included in the Company's consolidated statements of income and cash flows from April 1, 2006, therefore, the current quarter's results are not directly comparable with the first quarter's results for 2006. Revenue Net revenue for the first quarter 2007 compared to the first quarter 2006 increased by 33% to $2,321 million (31% at constant currency). Organic revenue growth worldwide was 9%. Dialysis Services revenue grew by 38% to $1,760 million (37% at constant currency) in the first quarter of 2007. Dialysis Product revenue increased by 18% to $560 million (13% at constant currency) in the same period. North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. revenue increased by 37% to $1,637 million. Dialysis Services revenue increased by 40% to $1,483 million. Average revenue per treatment for the U.S. clinics increased by 6% to $329 in the first quarter 2007 compared to $310 for the same quarter in 2006. Dialysis Product revenue increased by 14% to $153 million led by strong sales of our 2008K hemodialysis machines and the phosphate binding drug PhosLo. International revenue was $684 million, an increase of 24% (17% at constant currency) compared to the first quarter of 2006. Dialysis Services revenue reached $277 million, an increase of 30% (24% at constant currency). Dialysis Product revenue rose by 20% to $407 million (12% at constant currency), led by strong sales of dialyzers and peritoneal dialysis peritoneal dialysis n. The removal of soluble substances and water from the body by transfer across the peritoneum, utilizing a solution which is intermittently introduced into and removed from the peritoneal cavity. products. Earnings Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. (EBIT EBIT See: Earnings Before Interest and Taxes EBIT See earnings before interest and taxes (EBIT). ) increased by 50% to $365 million compared to $244 in the first quarter 2006. This translates into an operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: of 15.7%. For the first quarter 2006, the operating margin was 14.0%. Compared with the first quarter 2006, the operating margin in North America increased by 200 basis points to 15.8%, due to the consolidation of RCG, revenue rate improvements, the new PhosLo business and higher product sales. In the International segment, the operating margin increased by 30 basis points to 17.6%. The continued strong operational performance in the International segment was driven by increased product sales in all regions. Net interest expense for the first quarter 2007 was $95 million compared to $56 million in the same quarter of 2006. This increase is entirely attributable to the debt financing Debt Financing When a firm raises money for working capital or capital expenditures by selling bonds, bills, or notes to individual and/or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise to repay for the RCG acquisition. Income tax expense was $103 million for the first quarter of 2007 compared to $71 million in the first quarter of 2006, reflecting effective tax rates of 38.0% and 37.9%, respectively. Net income for the first quarter 2007 was $160 million, an increase of 38%. Net income increased by 28% when compared to the first quarter 2006 excluding one-time effects in 2006. Earnings per share (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. ) for the first quarter of 2007 rose by 37% to $1.63 per ordinary share ($0.54 per American Depositary Share American Depositary Share (ADS) Foreign stock issued in the US and registered in the ADR system. (ADS)) compared to $1.19 ($0.40 per ADS) for the first quarter of 2006. The weighted average number of shares outstanding for the first quarter of 2007 was approximately 98.4 million shares compared to 97.8 million shares for the first quarter of 2006. The increase in shares outstanding results from stock option exercises in 2006 and in the first quarter 2007. Cash Flow In the first quarter of 2007, the Company generated $283 million in cash from operations, representing 12% of revenue. The strong cash flow generation was primarily supported by increased earnings. A total of $109 million was spent for capital expenditures, net of disposals. Free Cash Flow before acquisitions was $174 million compared to $97 million in the first quarter of 2006. A total of $90 million in cash was used for acquisitions. Free Cash Flow after acquisitions was $84 million compared to $87 million last year excluding the acquisition of Renal Care Group. Please refer to the attachments for a complete overview on the first quarter of 2007 and the reconciliation of non-GAAP financial measures included in this release to the most comparable GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). financial measures. Patients - Clinics - Treatments As of March 31, 2007, Fresenius Medical Care treated 169,216 patients worldwide, which represents a 27% increase in patients compared to last year. North America provided dialysis treatments for 118,732 patients, an increase of 32%. Including 32 clinics managed by Fresenius Medical Care North America, the number of patients in North America was 120,603. The International segment served 50,484 patients, an increase of 17% over last year. As of March 31, 2007, the Company operated a total of 2,194 clinics worldwide. This is comprised of 1,574 clinics in North America, an increase of 35%, and 620 clinics in the International segment, an increase of 16%. Fresenius Medical Care delivered approximately 6.41 million dialysis treatments worldwide, which represents an increase of 28% year over year. North America accounted for 4.48 million treatments, an increase of 33%, and the International segment delivered 1.93 million treatments, an increase of 17% over last year. Employees As of March 31, 2007, Fresenius Medical Care employed 59,076 people (full-time equivalents) worldwide compared to 56,803 employees at the end of 2006. The increase of 2,273 employees is primarily due to the acquisition of Jiate Excelsior Co. Ltd. in Taiwan (announced in January 2007) and continued organic growth in the U.S. Debt/EBITDA Ratio The ratio of debt to Earnings before Interest, Taxes and Amortization (EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become ) decreased from 3.81 at the end of the first quarter of 2006 to 3.09 at the end of the first quarter 2007. At the end of 2006, the debt/EBITDA ratio was 3.23. Rating In the first quarter 2007, Standard & Poor's Ratings Services revised its outlook of the Company to stable from negative. At the same time, the 'BB' long-term corporate credit ratings on Fresenius Medical Care were affirmed. Moody's upgraded Fresenius Medical Care Senior Secured Credit Facility from Ba2 to Ba1. Fresenius Medical Care Proposes Share Split of 1:3 On March 21, 2007, the Company announced that it will propose a share split for both classes of shares (ordinary and preference) in the ratio of 1:3 at the next Annual General Meeting being held on May 15, 2007. If approved by the Shareholders, the Company expects the split to become effective in the third quarter of 2007. Outlook for 2007 Confirmed For the full year 2007, the Company confirms its outlook and expects to achieve revenue of approximately $9.4 billion. This represents an increase of 11%. Net income is projected to be in the range of $675 million and $695 million in 2007. This represents an increase of between 18% and 21% on an adjusted basis as compared to 2006 after one-time effects. On a reported basis, this translates into an increase in net income of between 26% and 29%. In addition, the Company expects spending on capital expenditures and acquisitions to be approximately $650 million in 2007. The debt/EBITDA ratio is projected to be below 3.0 by the end of 2007. Ben Lipps, Chief Executive Officer of Fresenius Medical Care, commented, "We are pleased to again deliver exceptionally strong financial results for the first quarter of 2007. Our strong performance was driven by our continuous quality improvement initiatives at the local clinical level, by cost leadership at the regional level, and by our commitment to advance our strategic objectives at the corporate level. The advantages of being the world's only vertically-integrated dialysis provider are increasingly evident as we compete in the global marketplace." Conference Call Fresenius Medical Care will hold a conference call to discuss the results of the first quarter of 2007 on Wednesday, May 2, 2007, at 3.30pm CEDT CEDT Central European Daylight Time (GMT +0200) CEDT Certified Economic Developer Trainer CEDT Centre for Electronics Design Technology CEDT Centre for Electronics and Design Technology / 9.30am EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT . The Company invites investors to view the live webcast of the conference call at the Company's website www.fmc-ag.com in the "Investor Relations Investor relations The process by which the corporation communicates with its investors. " section. A replay will be available shortly after the call. Fresenius Medical Care is the world's largest integrated provider of products and services for individuals undergoing dialysis because of chronic kidney failure Chronic Kidney Failure Definition Chronic kidney failure occurs when disease or disorder damages the kidneys so that they are no longer capable of adequately removing fluids and wastes from the body or of maintaining the proper level of certain , a condition that affects more than 1,500,000 individuals worldwide. Through its network of 2,194 dialysis clinics in North America, Europe, Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. , Asia-Pacific and Africa, Fresenius Medical Care provides dialysis treatment to 169,216 patients around the globe. Fresenius Medical Care is also the world's leading provider of dialysis products such as hemodialysis machines, dialyzers and related disposable products. Fresenius Medical Care is listed on the Frankfurt Stock Exchange Frankfurt Stock Exchange The largest of Germany's eight securities exchanges, operated by Deutsche Borse AS. (FME, FME3) and the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. (FMS, FMS/P). For more information about Fresenius Medical Care visit the Company's website at www.fmc-ag.com. This release contains forward-looking statements that are subject to various risks and uncertainties. Actual results could differ materially from those described in these forward-looking statements due to certain factors, including changes in business, economic and competitive conditions, regulatory reforms, foreign exchange rate fluctuations, uncertainties in 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. or investigative proceedings, and the availability of financing. These and other risks and uncertainties are detailed in Fresenius Medical Care AG & Co. KGaA's reports filed with the U.S. Securities and Exchange Commission. Fresenius Medical Care AG & Co. KGaA does not undertake any responsibility to update the forward-looking statements in this release. 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