Orthofix International N.V.
ORTHOFIX INTERNATIONAL N V (Form: 8-K, Received: 10/30/2017 16:07:00)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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 30, 2017

 

 

Orthofix International N.V.

(Exact name of Registrant as specified in its charter)

 

 

Curaçao

 

0-19961

 

98-1340767

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

 

 

 

 

7 Abraham de Veerstraat Curaçao

 

N/A

(Address of principal executive offices)

 

(Zip Code)

Registrant’s telephone number, including area code: 011-59-99-465-8525

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation 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))

 

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 30, 2017, Orthofix International N.V. (the “Company”) issued a press release announcing, among other things, its financial results for the fiscal quarter ended September 30, 2017. A copy of the press release is furnished herewith as Exhibit 99.1 and attached hereto.

The information furnished in this Item 2.02, including the exhibit incorporated by reference, will not be treated as “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. This information will not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or into another filing under the Exchange Act, unless that filing expressly refers to specific information in this Report.

Item 7.01

Regulation FD Disclosure.

The press release furnished in Exhibit 99.1 also provides an update on the Company’s business outlook, that is intended to be within the safe harbor provided by the Private Securities Litigation Reform Act of 1995 (the “Act”) as comprising forward looking statements within the meaning of the Act.

The information furnished in this Item 7.01, including the exhibit incorporated by reference, will not be treated as “filed” for the purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section. This information will not be deemed incorporated by reference into any filing under the Securities Act, or into another filing under the Exchange Act, unless that filing expressly refers to specific information in this Report.

 

Item 9.01.

Financial Statements and Exhibits.

(d) Exhibits

99.1 Press Release, dated October 30, 2017.

 


 

SIGNATURES

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.

 

 

Orthofix International N.V.

 

 

By:

 

 

/s/ Kimberley Elting

 

 

 

Kimberley Elting

Chief Legal Officer

 

 

Date: October 30, 2017

 

Exhibit 99.1

Orthofix International Reports Third Quarter 2017 Financial Results

 

Third Quarter Highlights

 

Net sales of $105.2 million, an increase of 6.9% compared to prior year or 6.0% on a constant currency basis

 

Increase in net sales for all four of our strategic business units, with net sales for Spine Fixation increasing by 19.3%

 

Earnings per share of $0.18 and adjusted earnings per share of $0.42 from continuing operations

 

Company updates full year 2017 guidance

LEWISVILLE, Texas — October 30, 2017 — Orthofix International N.V. (NASDAQ:OFIX) today reported its financial results for the third quarter ended September 30, 2017.  Net sales were $105.2 million, diluted earnings per share from continuing operations was $0.18 and adjusted earnings per share from continuing operations was $0.42.  

 

“We continue to execute on our strategy of increasing the organic growth and profitability of each of our four strategic business units while rationalizing corporate costs in all areas. This has resulted in an accelerating sales growth rate each quarter thus far this year, and positioned us for solid mid-single digit organic revenue growth and the opportunity for meaningful margin expansion in the years to come,” said Brad Mason, President and Chief Executive Officer.

 

Financial Results Overview

The following table provides net sales by strategic business unit (“SBU”):

 

  

 

Three Months Ended September 30,

 

(Unaudited, U.S. Dollars, in thousands)

 

2017

 

 

2016

 

 

Change

 

 

Constant

Currency

Change

 

BioStim

 

$

44,427

 

 

$

42,956

 

 

 

3.4

%

 

 

3.4

%

Biologics

 

 

15,218

 

 

 

14,335

 

 

 

6.2

%

 

 

6.2

%

Extremity Fixation

 

 

25,447

 

 

 

24,314

 

 

 

4.7

%

 

 

1.4

%

Spine Fixation

 

 

20,155

 

 

 

16,892

 

 

 

19.3

%

 

 

19.1

%

Net sales

 

$

105,247

 

 

$

98,497

 

 

 

6.9

%

 

 

6.0

%

 

Gross profit increased $2.9 million to $81.5 million. Gross margin decreased to 77.5% compared to 79.8% in the prior year period due primarily to sales mix, the impact of converting to stocking distributors in Brazil in our Extremity Fixation SBU, and $0.6 million of non-recurring expenses relating to our U.S. restructuring plan. Non-GAAP net margin, an internal metric that we define as gross profit less sales and marketing expenses, was $34.0 million compared to $36.9 million in the prior year period. The decrease in non-GAAP net margin was primarily due to higher commission expenses from geographic mix in Extremity Fixation and higher rates from Spine Fixation and Biologics distributors, as well as increased sales and use tax benefits realized in the third quarter of 2016.

Net income from continuing operations was $3.3 million, or $0.18 per share, compared to $10.4 million, or $0.56 per share in the prior year period. Adjusted net income from continuing operations was $7.7 million, or $0.42 per share, compared to adjusted net income of $6.6 million, or $0.36 per share in the prior year period.

EBITDA was $14.5 million, compared to $14.1 million in the prior year period. Adjusted EBITDA was $21.1 million, or 20.1% of net sales, for the third quarter, compared to $23.5 million, or 23.9% of net sales, in the prior year period.

 

Liquidity

As of September 30, 2017, cash and cash equivalents were $53.9 million compared to $39.6 million as of December 31, 2016. As of September 30, 2017, we had no outstanding indebtedness and borrowing capacity of $125 million. Cash flow from operations was $23.5 million, a decrease of $14.9 million, and free cash flow was $10.2 million, a decrease of $13.9 million when compared to the prior year period.

 


 

2017 Outlook

For the year ending December 31, 2017, the Company expects the following results, assuming exchange rates are the same as those currently prevailing.

 

 

 

Previous 2017 Outlook

 

 

Current 2017 Outlook

(Unaudited, U.S. Dollars, in millions, except per share data)

 

Low

 

 

High

 

 

Low

High

Net sales

 

$

422.0

 

 

$

425.0

 

 

$

428.0

 

1

$

431.0

 

1

Net income from continuing operations

 

$

17.7

 

 

$

21.4

 

 

$

14.2

 

2

$

17.0

 

2

Adjusted EBITDA

 

$

79.0

 

 

$

81.0

 

 

$

79.0

 

3

$

82.0

 

3

EPS from continuing operations

 

$

0.96

 

 

$

1.16

 

 

$

0.77

 

4

$

0.92

 

4

Adjusted EPS from continuing operations

 

$

1.54

 

 

$

1.60

 

 

$

1.54

 

5

$

1.63

 

5

 

1 Represents a year-over-year increase of 4.4% to 5.2% on a reported basis

2 Represents a year-over-year increase of 306.1% to 386.1%

3 Represents a year-over-year decrease of 0.4% to an increase of 3.4%

4 Represents a year-over-year increase of 305.3% to 384.2%

5 Represents a year-over-year increase of 5.5% to 11.6%

 

Conference Call

Orthofix will host a conference call today at 4:30 PM Eastern time to discuss the Company's financial results for the third quarter of 2017. Interested parties may access the conference call by dialing (844) 809-1992 in the U.S. and (612) 979-9886 outside the U.S., and referencing the conference ID 2078866. A replay of the call will be available for two weeks by dialing (855) 859-2056 in the U.S. and (404) 537-3406 outside the U.S., and entering the conference ID 2078866. A webcast of the conference call may be accessed by going to the Company's website at www.orthofix.com , by clicking on the Investors link and then the Events and Presentations page.

 

About Orthofix

Orthofix International N.V. is a diversified, global medical device company focused on improving patients' lives by providing superior reconstructive and regenerative orthopedic and spine solutions to physicians worldwide. Headquartered in Lewisville, Texas, the Company has four strategic business units: BioStim, Biologics, Extremity Fixation and Spine Fixation. Orthofix products are widely distributed via the Company's sales representatives and distributors. In addition, Orthofix is collaborating on research and development activities with leading clinical organizations such as Brown University, Sinai Hospital of Baltimore, Cleveland Clinic, Texas Scottish Rite Hospital for Children, and the Musculoskeletal Transplant Foundation. For more information, please visit  www.orthofix.com .

 

Forward-Looking Statements

This communication contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (“the Exchange Act”), and Section 27A of the Securities Act of 1933, as amended, relating to our business and financial outlook, which are based on our current beliefs, assumptions, expectations, estimates, forecasts and projections. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “projects,” “intends,” “predicts,” “potential,” or “continue” or other comparable terminology. These forward-looking statements are not guarantees of our future performance and involve risks, uncertainties, estimates and assumptions that are difficult to predict. Therefore, our actual outcomes and results may differ materially from those expressed in these forward-looking statements. You should not place undue reliance on any of these forward-looking statements. Further, any forward-looking statement speaks only as of the date hereof, unless it is specifically otherwise stated to be made as of a different date. We undertake no obligation to further update any such statement, or the risk factors described in Part I, Item 1A under the heading Risk Factors in our Form 10-K for the year ended December 31, 2016, to reflect new information, the occurrence of future events or circumstances or otherwise.

 

Company Contact

 

 

Orthofix International N.V.

 

 

Mark Quick

 

 

P: 214-937-2924

 

 

E: markquick@orthofix.com

 

 

 

2


 

ORTHOFIX INTERNATIONAL N.V.

Condensed Consolidated Statements of Operations

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(Unaudited, U.S. Dollars, in thousands, except share and per  share data)

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Net sales

 

$

105,247

 

 

$

98,497

 

 

$

316,927

 

 

$

301,251

 

Cost of sales

 

 

23,717

 

 

 

19,880

 

 

 

69,475

 

 

 

64,533

 

Gross profit

 

 

81,530

 

 

 

78,617

 

 

 

247,452

 

 

 

236,718

 

Sales and marketing

 

 

47,493

 

 

 

41,717

 

 

 

146,496

 

 

 

132,582

 

General and administrative

 

 

18,068

 

 

 

19,272

 

 

 

56,759

 

 

 

54,822

 

Research and development

 

 

6,935

 

 

 

6,858

 

 

 

21,246

 

 

 

21,294

 

Charges related to U.S. Government resolutions

 

 

 

 

 

1,499

 

 

 

 

 

 

14,369

 

Operating  income

 

 

9,034

 

 

 

9,271

 

 

 

22,951

 

 

 

13,651

 

Interest income (expense), net

 

 

(15

)

 

 

471

 

 

 

106

 

 

 

320

 

Other income (expense), net

 

 

479

 

 

 

(634

)

 

 

(3,284

)

 

 

1,346

 

Income before income taxes

 

 

9,498

 

 

 

9,108

 

 

 

19,773

 

 

 

15,317

 

Income tax benefit (expense)

 

 

(6,150

)

 

 

1,276

 

 

 

(13,998

)

 

 

(6,703

)

Net income from continuing operations

 

 

3,348

 

 

 

10,384

 

 

 

5,775

 

 

 

8,614

 

Discontinued operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from discontinued operations

 

 

65

 

 

 

(1,018

)

 

 

(1,762

)

 

 

(3,580

)

Income tax benefit

 

 

43

 

 

 

530

 

 

 

642

 

 

 

1,258

 

Net income (loss) from discontinued operations

 

 

108

 

 

 

(488

)

 

 

(1,120

)

 

 

(2,322

)

Net income

 

$

3,456

 

 

$

9,896

 

 

$

4,655

 

 

$

6,292

 

Net income (loss) per common share—basic

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income from continuing operations

 

$

0.18

 

 

$

0.57

 

 

$

0.32

 

 

$

0.47

 

Net income (loss) from discontinued operations

 

 

0.01

 

 

 

(0.02

)

 

 

(0.06

)

 

 

(0.13

)

Net income per common share—basic

 

$

0.19

 

 

$

0.55

 

 

$

0.26

 

 

$

0.34

 

Net income (loss) per common share—diluted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income from continuing operations

 

$

0.18

 

 

$

0.56

 

 

$

0.31

 

 

$

0.46

 

Net income (loss) from discontinued operations

 

 

0.01

 

 

 

(0.02

)

 

 

(0.06

)

 

 

(0.12

)

Net income per common share—diluted

 

$

0.19

 

 

$

0.54

 

 

$

0.25

 

 

$

0.34

 

Weighted average number of common shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

18,180,845

 

 

 

18,091,650

 

 

 

18,071,093

 

 

 

18,238,533

 

Diluted

 

 

18,572,791

 

 

 

18,382,118

 

 

 

18,394,542

 

 

 

18,569,861

 

3


 

ORTHOFIX INTERNATIONAL N.V.

Condensed Consolidated Balance Sheets

 

(U.S. Dollars, in thousands except share data)

 

September 30,

2017

 

 

December 31,

2016

 

 

 

(unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

53,925

 

 

$

39,572

 

Restricted cash

 

 

 

 

 

14,369

 

Accounts receivable, net of allowances of $8,925 and $8,396, respectively

 

 

61,187

 

 

 

57,848

 

Inventories

 

 

80,124

 

 

 

63,346

 

Prepaid expenses and other current assets

 

 

18,172

 

 

 

19,238

 

Total current assets

 

 

213,408

 

 

 

194,373

 

Property, plant and equipment, net

 

 

46,678

 

 

 

48,916

 

Patents and other intangible assets, net

 

 

9,915

 

 

 

7,461

 

Goodwill

 

 

53,565

 

 

 

53,565

 

Deferred income taxes

 

 

47,052

 

 

 

47,325

 

Other long-term assets

 

 

15,683

 

 

 

20,463

 

Total assets

 

$

386,301

 

 

$

372,103

 

Liabilities and shareholders’ equity

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

13,352

 

 

$

14,353

 

Other current liabilities

 

 

60,718

 

 

 

69,088

 

Total current liabilities

 

 

74,070

 

 

 

83,441

 

Other long-term liabilities

 

 

26,920

 

 

 

25,185

 

Total liabilities

 

 

100,990

 

 

 

108,626

 

Contingencies

 

 

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

 

 

 

Common shares $0.10 par value; 50,000,000 shares authorized; 18,212,916 and

   17,828,155 issued and outstanding as of September 30, 2017 and December 31,

   2016,  respectively

 

 

1,821

 

 

 

1,783

 

Additional paid-in capital

 

 

215,778

 

 

 

204,095

 

Retained earnings

 

 

68,834

 

 

 

64,179

 

Accumulated other comprehensive loss

 

 

(1,122

)

 

 

(6,580

)

Total shareholders’ equity

 

 

285,311

 

 

 

263,477

 

Total liabilities and shareholders’ equity

 

$

386,301

 

 

$

372,103

 

 

 

4


 

ORTHOFIX INTERNATIONAL N.V.
Non-GAAP Financial Measures

The following tables present reconciliations of net income (loss) from continuing operations, earnings per share (“EPS”) from continuing operations, gross profit, and net cash from operating activities, in each case calculated in accordance with U.S. generally accepted accounting principles (“GAAP”), to, as applicable, non-GAAP financial measures, referred to as "EBITDA," "Adjusted EBITDA," "Adjusted net income from continuing operations," "Adjusted earnings per share from continuing operations," "Non-GAAP net margin" and "Free cash flow" that exclude items specified in the tables. A more detailed explanation of the items excluded from these non-GAAP financial measures, as well as why management believes the non-GAAP financial measures are useful to them, is included following the reconciliations.  

 

EBITDA and Adjusted EBITDA

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

(Unaudited, U.S. Dollars, in thousands)

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Net income from continuing operations

 

$

3,348

 

 

$

10,384

 

 

$

5,775

 

 

$

8,614

 

Interest expense (income), net

 

 

15

 

 

 

(471

)

 

 

(106

)

 

 

(320

)

Income tax expense (benefit)

 

 

6,150

 

 

 

(1,276

)

 

 

13,998

 

 

 

6,703

 

Depreciation and amortization

 

 

4,974

 

 

 

5,480

 

 

 

15,421

 

 

 

15,483

 

EBITDA

 

$

14,487

 

 

$

14,117

 

 

$

35,088

 

 

$

30,480

 

Share-based compensation

 

 

3,632

 

 

 

7,862

 

 

 

9,124

 

 

 

11,874

 

Foreign exchange impact

 

 

(794

)

 

 

566

 

 

 

(2,425

)

 

 

(1,434

)

Strategic investments

 

 

293

 

 

 

(62

)

 

 

9,619

 

 

 

342

 

SEC / FCPA matters and related costs

 

 

1,150

 

 

 

691

 

 

 

1,851

 

 

 

1,481

 

Infrastructure investments

 

 

 

 

 

827

 

 

 

 

 

 

3,073

 

Legal judgments/settlements

 

 

179

 

 

 

(3,000

)

 

 

1,798

 

 

 

(3,000

)

Charges related to U.S. Government resolutions

 

 

 

 

 

1,499

 

 

 

 

 

 

14,369

 

Restructuring

 

 

2,160

 

 

 

 

 

 

2,242

 

 

 

 

Succession charges

 

 

 

 

 

1,026

 

 

 

 

 

 

1,026

 

Adjusted EBITDA

 

$

21,107

 

 

$

23,526

 

 

$

57,297

 

 

$

58,211

 

As a % of  net sales

 

 

20.1

%

 

 

23.9

%

 

 

18.1

%

 

 

19.3

%

 

Adjusted Net Income from Continuing Operations

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

(Unaudited, U.S. Dollars, in thousands)

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Net income from continuing operations

 

$

3,348

 

 

$

10,384

 

 

$

5,775

 

 

$

8,614

 

Foreign exchange impact

 

 

(794

)

 

 

566

 

 

 

(2,425

)

 

 

(1,434

)

Strategic investments

 

 

293

 

 

 

(62

)

 

 

9,619

 

 

 

342

 

SEC / FCPA matters and related costs

 

 

1,150

 

 

 

691

 

 

 

1,851

 

 

 

1,481

 

Infrastructure investments

 

 

 

 

 

827

 

 

 

 

 

 

3,073

 

Legal judgments/settlements

 

 

179

 

 

 

(3,000

)

 

 

1,798

 

 

 

(3,000

)

Charges related to U.S. Government resolutions

 

 

 

 

 

1,499

 

 

 

 

 

 

14,369

 

Restructuring

 

 

2,160

 

 

 

 

 

 

2,242

 

 

 

 

Succession charges

 

 

 

 

 

1,026

 

 

 

 

 

 

1,026

 

Long-term income tax rate adjustment

 

 

1,405

 

 

 

(5,325

)

 

 

1,512

 

 

 

(5,143

)

Adjusted net income from continuing operations

 

$

7,741

 

 

$

6,606

 

 

$

20,372

 

 

$

19,328

 

 

5


 

Adjusted Earnings per Share from Continuing Operations

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

(Unaudited, per diluted share)

 

2017

 

 

2016

 

 

2017

 

 

2016

 

EPS from continuing operations

 

$

0.18

 

 

$

0.56

 

 

$

0.31

 

 

$

0.46

 

Foreign exchange impact

 

 

(0.04

)

 

 

0.03

 

 

 

(0.13

)

 

 

(0.08

)

Strategic investments

 

 

0.02

 

 

 

 

 

 

0.52

 

 

 

0.02

 

SEC / FCPA matters and related costs

 

 

0.06

 

 

 

0.04

 

 

 

0.10

 

 

 

0.08

 

Infrastructure investments

 

 

 

 

 

0.04

 

 

 

 

 

 

0.17

 

Legal judgments/settlements

 

 

0.01

 

 

 

(0.16

)

 

 

0.10

 

 

 

(0.16

)

Charges related to U.S. Government resolutions

 

 

 

 

 

0.08

 

 

 

 

 

 

0.77

 

Restructuring

 

 

0.12

 

 

 

 

 

 

0.12

 

 

 

 

Succession charges

 

 

 

 

 

0.06

 

 

 

 

 

 

0.06

 

Long-term income tax rate adjustment

 

 

0.07

 

 

 

(0.29

)

 

 

0.09

 

 

 

(0.28

)

Adjusted EPS from continuing operations

 

$

0.42

 

 

$

0.36

 

 

$

1.11

 

 

$

1.04

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of diluted common shares

 

 

18,572,791

 

 

 

18,382,118

 

 

 

18,394,542

 

 

 

18,569,861

 

 

Non-GAAP Net Margin

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

(Unaudited, U.S. Dollars, in thousands)

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Gross profit

 

$

81,530

 

 

$

78,617

 

 

$

247,452

 

 

$

236,718

 

Sales and marketing

 

 

(47,493

)

 

 

(41,717

)

 

 

(146,496

)

 

 

(132,582

)

Non-GAAP net margin

 

$

34,037

 

 

$

36,900

 

 

$

100,956

 

 

$

104,136

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BioStim

 

$

18,285

 

 

$

19,996

 

 

$

54,887

 

 

$

54,980

 

Biologics

 

 

6,010

 

 

 

6,821

 

 

 

18,651

 

 

 

19,642

 

Extremity Fixation

 

 

7,723

 

 

 

8,834

 

 

 

20,901

 

 

 

24,170

 

Spine Fixation

 

 

2,122

 

 

 

1,388

 

 

 

6,825

 

 

 

5,925

 

Corporate

 

 

(103

)

 

 

(139

)

 

 

(308

)

 

 

(581

)

Non-GAAP net margin

 

$

34,037

 

 

$

36,900

 

 

$

100,956

 

 

$

104,136

 

 

Free Cash Flow

 

Nine Months Ended

September 30,

 

(Unaudited, U.S. Dollars, in thousands)

 

2017

 

 

2016

 

Net cash from operating activities

 

$

23,494

 

 

$

38,396

 

Capital expenditures

 

 

(13,290

)

 

 

(14,261

)

Free cash flow

 

$

10,204

 

 

$

24,135

 

6


 

 

2017 Outlook

 

 

Previous 2017 Outlook

 

 

Current 2017 Outlook

 

(Unaudited, U.S. Dollars, in millions)

 

Low

 

 

High

 

 

Low

 

 

High

 

Net income from continuing operations

 

$

17.7

 

 

$

21.4

 

 

$

14.2

 

 

$

17.0

 

Interest expense, net

 

 

0.2

 

 

 

0.1

 

 

 

 

 

 

 

Income tax expense

 

 

15.7

 

 

 

15.5

 

 

 

16.7

 

 

 

17.0

 

Depreciation and amortization

 

 

20.0

 

 

 

20.0

 

 

 

20.2

 

 

 

20.2

 

EBITDA

 

$

53.6

 

 

$

57.0

 

 

$

51.1

 

 

$

54.2

 

Share-based compensation

 

 

13.0

 

 

 

13.0

 

 

 

13.0

 

 

 

13.0

 

Foreign exchange impact

 

 

(1.6

)

 

 

(1.6

)

 

 

(2.4

)

 

 

(2.4

)

Strategic investments

 

 

10.3

 

 

 

9.3

 

 

 

10.2

 

 

 

10.2

 

SEC / FCPA matters and related costs

 

 

1.2

 

 

 

1.0

 

 

 

2.4

 

 

 

2.4

 

Legal judgments/settlements

 

 

1.6

 

 

 

1.6

 

 

 

1.8

 

 

 

1.8

 

Restructuring

 

 

0.9

 

 

 

0.7

 

 

 

2.9

 

 

 

2.8

 

Adjusted EBITDA

 

$

79.0

 

 

$

81.0

 

 

$

79.0

 

 

$

82.0

 

 

 

 

Previous 2017 Outlook

 

 

Current 2017 Outlook

 

(Unaudited, per diluted share)

 

Low

 

 

High

 

 

Low

 

 

High

 

EPS from continuing operations

 

$

0.96

 

 

$

1.16

 

 

$

0.77

 

 

$

0.92

 

Foreign exchange impact

 

 

(0.09

)

 

 

(0.09

)

 

 

(0.13

)

 

 

(0.13

)

Strategic investments

 

 

0.56

 

 

 

0.51

 

 

 

0.55

 

 

 

0.55

 

SEC / FCPA matters and related costs

 

 

0.07

 

 

 

0.05

 

 

 

0.13

 

 

 

0.13

 

Legal judgments/settlements

 

 

0.09

 

 

 

0.09

 

 

 

0.10

 

 

 

0.10

 

Restructuring

 

 

0.05

 

 

 

0.04

 

 

 

0.16

 

 

 

0.15

 

Long-term income tax rate adjustment

 

 

(0.10

)

 

 

(0.16

)

 

 

(0.04

)

 

 

(0.09

)

Adjusted EPS from continuing operations

 

$

1.54

 

 

$

1.60

 

 

$

1.54

 

 

$

1.63

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of diluted common shares

 

 

18,400,000

 

 

 

18,400,000

 

 

 

18,400,000

 

 

 

18,400,000

 

 


7


 

Non-GAAP Measures:

Constant Currency

Constant currency is a non-GAAP measure, which is calculated by using foreign currency rates from the comparable, prior-year period, to present net sales at comparable rates. Constant currency can be presented for numerous GAAP measures, but is most commonly used by management to analyze net sales without the impact of changes in foreign currency rates.

 

EBITDA

EBITDA is a non-GAAP financial measure, which is calculated by adding interest income (expense), net; income tax expense; and depreciation and amortization to net income (loss) from continuing operations. EBITDA provides management with additional insight to its results of operations.

 

Adjusted EBITDA, Adjusted Net Income from Continuing Operations and Adjusted Earnings per Share from Continuing Operations

These non-GAAP financial measures provide management with additional insight to its results of operations and are calculated using the following adjustments:

 

Share-based compensation  – costs related to our share-based compensation plans, which include stock options, restricted stock awards, performance-based restricted stock awards, market-based restricted stock awards and our stock purchase plan

 

Foreign exchange impact  – gains and losses related to foreign currency transactions; guidance presented does not include the impact of any future foreign exchange fluctuations

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