Second Quarter Highlights
-
Second quarter reported net sales of $101.0 million; an increase of
5.0% on a constant currency basis
-
Adjusted EBITDA of $17.2 million, or 17.1% of net sales
-
Company increases fiscal year 2015 guidance
LEWISVILLE, Texas--(BUSINESS WIRE)--
Orthofix International N.V. (NASDAQ:OFIX) today reported its financial
results for the second quarter ended June 30, 2015, including net sales
of $101.0 million, diluted earnings per share from continuing operations
of $0.21 and adjusted diluted earnings per share of $0.36.
"I am pleased with our second quarter results and the improving outlook
for our business reflected in our higher guidance. While I believe this
quarter demonstrates that we have put the right strategies in place and
are making good progress, we need to continue to execute against our
plan to drive similar or better results going forward," said President
and Chief Executive Officer, Brad Mason.
Second Quarter Financial Results
The following table provides net sales and constant currency net sales
growth by strategic business unit ("SBU") for the three months
ended June 30, 2015 and 2014, respectively:
|
|
|
|
Three Months Ended June 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Constant
|
|
|
|
|
|
|
|
|
|
|
Reported
|
|
|
Currency
|
|
(Unaudited, U.S. Dollars, in thousands)
|
|
|
2015
|
|
|
2014
|
|
|
Growth
|
|
|
Growth
|
|
BioStim
|
|
|
$
|
40,703
|
|
|
$
|
39,513
|
|
|
3
|
%
|
|
|
3
|
%
|
|
Biologics
|
|
|
|
15,274
|
|
|
|
13,853
|
|
|
10
|
%
|
|
|
10
|
%
|
|
Extremity Fixation
|
|
|
|
25,594
|
|
|
|
27,303
|
|
|
(6
|
)%
|
|
|
12
|
%
|
|
Spine Fixation
|
|
|
|
19,383
|
|
|
|
20,316
|
|
|
(5
|
)%
|
|
|
(4
|
)%
|
|
Total net sales
|
|
|
$
|
100,954
|
|
|
$
|
100,985
|
|
|
(0
|
)%
|
|
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales were flat at $101.0 million compared to the same prior year
period; however, net sales increased by approximately 5.0% on a constant
currency basis. Net sales increased in our BioStim and Biologics SBUs
due primarily to continued expansion of our sales channels and improving
execution of our commercial strategies. Net sales in our Extremity
Fixation SBU decreased 6.3% (an increase of 11.8% on a constant currency
basis) compared to the same prior year period. The increase in constant
currency terms was primarily due to cash collections from customers. Net
sales in our Spine Fixation SBU decreased 4.6% year-over-year; however,
second quarter sales grew 19.0% sequentially over the first quarter,
highlighting the success of the team and strategies that were put in
place late last year.
Gross margin was 78.3% compared to 74.8% for the same prior year period.
Gross profit increased $3.4 million to $79.0 million, compared to $75.6
million in the same prior year period, primarily due to the effects of
foreign exchange rates and lower charges for inventory shrinkage in 2015
when compared to the same period of 2014. In the second quarter of 2014,
we incurred $1.9 million of charges for inventory shrinkage as a result
of physical counts of our field inventory as part of the remediation
activities that followed our Original Restatement.
Total net margin (gross profit less sales and marketing expenses)
was $36.1 million, or 35.8% of net sales, an increase of 7.6% from $33.6
million, or 33.2% of net sales, in the second quarter of 2014. The
increase in net margin was driven by the increase in gross profit offset
somewhat by the planned increase in sales management and field-based
education and training personnel.
Operating expenses increased by $5.2 million to $74.1 million, compared
to $68.9 million in the prior year period. The increase in operating
expenses was primarily a result of an increase in general and
administrative expenses as the Company invested in its infrastructure,
an increase in share-based compensation, costs related to legal
judgment, and an increase in professional fees and personnel costs
within our finance department as part of our internal control
remediation efforts. Operating income was $4.9 million for the quarter
compared to $6.7 million in the second quarter of 2014.
Adjusted EBITDA from continuing operations, which excludes share-based
compensation, foreign exchange impact, strategic investments,
restatements and related costs, infrastructure investments, legal
judgment, and gain on sale of assets, was $17.2 million or 17.1% of net
sales for the quarter, compared to $16.2 million or 16.1% of net sales
in the same prior year period.
Net income from continuing operations for the quarter was $4.1 million,
or $0.21 per diluted share, compared to net income of $3.3 million, or
$0.18 per diluted share, in the same prior year period.
Adjusted net income from continuing operations for the quarter was $6.8
million, or $0.36 per diluted share, compared to adjusted net income
from continuing operations of $4.6 million, or $0.25 per diluted share,
in the same prior year period.
As of June 30, 2015, cash and cash equivalents were $55.9
million compared to $71.2 million, which includes restricted cash, as
of December 31, 2014. As of June 30, 2015, the Company had no
outstanding indebtedness and borrowing capacity of $100 million. The
Company's current credit facility expires August 30, 2015, and the
Company is currently in negotiations to renew the credit facility, which
it expects to have completed prior to the expiration of the current
facility.
Fiscal 2015 Outlook
The fiscal year 2015 outlook below assumes constant currency exchange
rates from those currently prevailing:
|
|
|
Previous Quarter
|
|
|
Current Quarter
|
|
|
|
2015 Outlook
|
|
|
2015 Outlook
|
|
|
|
|
|
|
|
|
Net Sales
|
|
$385 million — $390 million
|
|
|
$390 million — $395 million1
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
$55 million — $58 million
|
|
|
$57 million — $60 million2
|
|
|
|
|
|
|
|
1 Represents a year over year increase of 0.6% to 1.9%
on a constant currency basis and a decrease of 3.1% to 1.8% on a
reported basis.
2 Represents a year over year
decrease of 13.0% to 8.4% on a constant currency basis and a decrease of
12.8% to 8.3% on a reported basis.
Conference Call
Orthofix will host a conference call today at 4:30 PM Eastern time to
discuss the Company's financial results for the second quarter 2015.
Interested parties may access the conference call by dialing (888)
510-1765 in the U.S. and (719) 325-2432 outside the U.S., and
referencing the conference ID 7192399. A replay of the call will be
available for two weeks by dialing (888) 203-1112 in the U.S. and (719)
457-0820 outside the U.S., and entering the conference ID 7192399. 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 that include BioStim, Biologics,
Extremity Fixation and Spine Fixation. Orthofix products are widely
distributed via the Company's sales representatives, distributors and
its subsidiaries. In addition, Orthofix is collaborating on research and
development activities with leading clinical organizations such as
the Musculoskeletal Transplant Foundation and the Texas Scottish Rite
Hospital for Children. For more information, please visit www.orthofix.com.
Forward-Looking Statements
This communication contains certain forward-looking statements under the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements, which may include, but are not limited to, statements
concerning the projections, financial condition, results of operations
and businesses of Orthofix and its subsidiaries, are based on
management's current expectations and estimates and involve risks and
uncertainties that could cause actual results or outcomes to differ
materially from those contemplated by the forward-looking statements.
The forward-looking statements in this release do not constitute
guarantees or promises of future performance. Factors that could cause
or contribute to such differences may include, but are not limited to,
risks relating to: an investigation by the Division of Enforcement of
the Securities and Exchange Commission (the "SEC") and related
securities class action litigation arising out of our prior accounting
review and restatements of financial statements; our review of
allegations of improper payments involving our Brazil-based subsidiary;
the geographic concentration of certain of our sales and accounts
receivable in countries or territories that are facing severe fiscal
challenges; the expected sales of our products, including recently
launched products; unanticipated expenditures; changing relationships
with customers, suppliers, strategic partners and lenders; changes to
and the interpretation of governmental regulations; the resolution of
pending litigation matters (including our indemnification obligations
with respect to certain product liability claims against our former
sports medicine global business unit); our ongoing compliance
obligations under a corporate integrity agreement with the Office of
Inspector General of the Department of Health and Human Services (and
related terms of probation) and a deferred prosecution agreement with
the U.S. Department of Justice; risks relating to the protection of
intellectual property; changes to the reimbursement policies of third
parties; the impact of competitive products; changes to the competitive
environment; the acceptance of new products in the market; conditions of
the orthopedic and spine industry; credit markets and the global economy
(including the expiration of our current secured revolving credit
agreement in August 2015); corporate development and market development
activities, including acquisitions or divestitures; unexpected costs or
operating unit performance related to recent acquisitions; and other
risks described in our 2014 Annual Report on Form 10-K, Part I, Item 1A,
"Risk Factors" as well as in other reports that we file in the future.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ORTHOFIX INTERNATIONAL N.V.
|
|
Condensed Consolidated Statements of Operations
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
|
June 30,
|
|
June 30,
|
|
(Unaudited, U.S. Dollars, in thousands, except share and per
share data)
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
Product sales
|
|
|
$
|
86,868
|
|
|
$
|
88,579
|
|
|
$
|
163,700
|
|
|
$
|
176,879
|
|
|
Marketing service fees
|
|
|
|
14,086
|
|
|
|
12,406
|
|
|
|
27,016
|
|
|
|
24,120
|
|
|
Net sales
|
|
|
|
100,954
|
|
|
|
100,985
|
|
|
|
190,716
|
|
|
|
200,999
|
|
|
Cost of sales
|
|
|
|
21,910
|
|
|
|
25,414
|
|
|
|
41,249
|
|
|
|
52,187
|
|
|
Gross profit
|
|
|
|
79,044
|
|
|
|
75,571
|
|
|
|
149,467
|
|
|
|
148,812
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing
|
|
|
|
42,946
|
|
|
|
42,013
|
|
|
|
87,231
|
|
|
|
83,184
|
|
|
General and administrative
|
|
|
|
22,506
|
|
|
|
18,214
|
|
|
|
44,075
|
|
|
|
36,074
|
|
|
Research and development
|
|
|
|
6,451
|
|
|
|
6,313
|
|
|
|
12,296
|
|
|
|
12,246
|
|
|
Restatements and related costs
|
|
|
|
2,213
|
|
|
|
2,327
|
|
|
|
8,129
|
|
|
|
10,633
|
|
|
|
|
|
|
74,116
|
|
|
|
68,867
|
|
|
|
151,731
|
|
|
|
142,137
|
|
|
Operating income (loss)
|
|
|
|
4,928
|
|
|
|
6,704
|
|
|
|
(2,264
|
)
|
|
|
6,675
|
|
|
Other income and expense
|
|
|
|
|
|
|
|
|
|
|
Interest income (expense), net
|
|
|
|
74
|
|
|
|
(492
|
)
|
|
|
(198
|
)
|
|
|
(960
|
)
|
|
Other income
|
|
|
|
853
|
|
|
|
363
|
|
|
|
1,544
|
|
|
|
91
|
|
|
|
|
|
|
927
|
|
|
|
(129
|
)
|
|
|
1,346
|
|
|
|
(869
|
)
|
|
Income before income taxes
|
|
|
|
5,855
|
|
|
|
6,575
|
|
|
|
(918
|
)
|
|
|
5,806
|
|
|
Income tax expense
|
|
|
|
(1,778
|
)
|
|
|
(3,309
|
)
|
|
|
(2,742
|
)
|
|
|
(4,488
|
)
|
|
Net income (loss) from continuing operations
|
|
|
|
4,077
|
|
|
|
3,266
|
|
|
|
(3,660
|
)
|
|
|
1,318
|
|
|
Discontinued operations
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations
|
|
|
|
(730
|
)
|
|
|
(5,829
|
)
|
|
|
(1,511
|
)
|
|
|
(6,623
|
)
|
|
Income tax benefit
|
|
|
|
225
|
|
|
|
1,880
|
|
|
|
364
|
|
|
|
2,114
|
|
|
Net loss from discontinued operations
|
|
|
|
(505
|
)
|
|
|
(3,949
|
)
|
|
|
(1,147
|
)
|
|
|
(4,509
|
)
|
|
Net income (loss)
|
|
|
$
|
3,572
|
|
|
$
|
(683
|
)
|
|
$
|
(4,807
|
)
|
|
$
|
(3,191
|
)
|
|
Net income (loss) per common share—basic:
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) from continuing operations
|
|
|
$
|
0.22
|
|
|
$
|
0.18
|
|
|
$
|
(0.20
|
)
|
|
$
|
0.07
|
|
|
Net loss from discontinued operations
|
|
|
|
(0.03
|
)
|
|
|
(0.22
|
)
|
|
|
(0.06
|
)
|
|
|
(0.24
|
)
|
|
Net income (loss) per common share—basic
|
|
|
$
|
0.19
|
|
|
$
|
(0.04
|
)
|
|
$
|
(0.26
|
)
|
|
$
|
(0.17
|
)
|
|
Net income (loss) per common share—diluted:
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) from continuing operations
|
|
|
$
|
0.21
|
|
|
$
|
0.18
|
|
|
$
|
(0.20
|
)
|
|
$
|
0.07
|
|
|
Net loss from discontinued operations
|
|
|
|
(0.02
|
)
|
|
|
(0.22
|
)
|
|
|
(0.06
|
)
|
|
|
(0.24
|
)
|
|
Net income (loss) per common share—diluted
|
|
|
$
|
0.19
|
|
|
$
|
(0.04
|
)
|
|
$
|
(0.26
|
)
|
|
$
|
(0.17
|
)
|
|
Weighted average number of common shares:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
18,769,415
|
|
|
|
18,445,348
|
|
|
|
18,750,804
|
|
|
|
18,322,185
|
|
|
Diluted
|
|
|
|
18,989,579
|
|
|
|
18,621,192
|
|
|
|
18,750,804
|
|
|
|
18,435,128
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ORTHOFIX INTERNATIONAL N.V.
|
|
Condensed Consolidated Balance Sheets
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
December 31,
|
|
(U.S. Dollars, in thousands except share and per share data)
|
|
|
2015
|
|
2014
|
|
Assets
|
|
|
(unaudited)
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
55,946
|
|
|
$
|
36,815
|
|
|
Restricted cash
|
|
|
|
—
|
|
|
|
34,424
|
|
|
Trade accounts receivable, less allowance for doubtful accounts of
$7,153 and $7,285 at June 30, 2015 and December 31, 2014,
respectively
|
|
|
|
58,356
|
|
|
|
61,358
|
|
|
Inventories
|
|
|
|
59,219
|
|
|
|
59,846
|
|
|
Deferred income taxes
|
|
|
|
36,970
|
|
|
|
37,413
|
|
|
Prepaid expenses and other current assets
|
|
|
|
24,723
|
|
|
|
26,552
|
|
|
Total current assets
|
|
|
|
235,214
|
|
|
|
256,408
|
|
|
Property, plant and equipment, net
|
|
|
|
49,963
|
|
|
|
48,549
|
|
|
Patents and other intangible assets, net
|
|
|
|
5,626
|
|
|
|
7,152
|
|
|
Goodwill
|
|
|
|
53,565
|
|
|
|
53,565
|
|
|
Deferred income taxes
|
|
|
|
17,910
|
|
|
|
18,541
|
|
|
Other long-term assets
|
|
|
|
26,876
|
|
|
|
8,970
|
|
|
Total assets
|
|
|
$
|
389,154
|
|
|
$
|
393,185
|
|
|
Liabilities and shareholders' equity
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Trade accounts payable
|
|
|
$
|
17,230
|
|
|
$
|
13,223
|
|
|
Other current liabilities
|
|
|
|
47,678
|
|
|
|
53,220
|
|
|
Total current liabilities
|
|
|
|
64,908
|
|
|
|
66,443
|
|
|
Deferred income taxes
|
|
|
|
—
|
|
|
|
229
|
|
|
Other long-term liabilities
|
|
|
|
26,569
|
|
|
|
26,886
|
|
|
Total liabilities
|
|
|
|
91,477
|
|
|
|
93,558
|
|
|
Contingencies
|
|
|
|
|
|
|
Shareholders' equity
|
|
|
|
|
|
|
Common shares $0.10 par value; 50,000,000 shares authorized;
18,839,335 and 18,611,495 issued and outstanding as of June 30,
2015 and December 31, 2014, respectively
|
|
|
|
1,884
|
|
|
|
1,861
|
|
|
Additional paid-in capital
|
|
|
|
237,987
|
|
|
|
232,788
|
|
|
Retained earnings
|
|
|
|
60,553
|
|
|
|
65,360
|
|
|
Accumulated other comprehensive loss
|
|
|
|
(2,747
|
)
|
|
|
(382
|
)
|
|
Total shareholders' equity
|
|
|
|
297,677
|
|
|
|
299,627
|
|
|
Total liabilities and shareholders' equity
|
|
|
$
|
389,154
|
|
|
$
|
393,185
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ORTHOFIX INTERNATIONAL N.V.
Selected Financial Data
Net Sales by SBU
The following table provides net sales and constant currency net sales
growth by SBU for the three and six months ended June 30, 2015 and 2014,
respectively:
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Constant
|
|
|
|
|
|
|
|
|
|
|
Reported
|
|
|
Currency
|
|
(Unaudited, U.S. Dollars, in thousands)
|
|
|
2015
|
|
|
2014
|
|
|
Growth
|
|
|
Growth
|
|
BioStim
|
|
|
$
|
40,703
|
|
|
$
|
39,513
|
|
|
3
|
%
|
|
|
3
|
%
|
|
Biologics
|
|
|
|
15,274
|
|
|
|
13,853
|
|
|
10
|
%
|
|
|
10
|
%
|
|
Extremity Fixation
|
|
|
|
25,594
|
|
|
|
27,303
|
|
|
(6
|
)%
|
|
|
12
|
%
|
|
Spine Fixation
|
|
|
|
19,383
|
|
|
|
20,316
|
|
|
(5
|
)%
|
|
|
(4
|
)%
|
|
Total net sales
|
|
|
$
|
100,954
|
|
|
$
|
100,985
|
|
|
(0
|
)%
|
|
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Constant
|
|
|
|
|
|
|
|
|
|
|
Reported
|
|
|
Currency
|
|
(Unaudited, U.S. Dollars, in thousands)
|
|
|
2015
|
|
|
2014
|
|
|
Growth
|
|
|
Growth
|
|
BioStim
|
|
|
$
|
78,403
|
|
|
$
|
76,650
|
|
|
2
|
%
|
|
|
2
|
%
|
|
Biologics
|
|
|
|
29,235
|
|
|
|
26,863
|
|
|
9
|
%
|
|
|
9
|
%
|
|
Extremity Fixation
|
|
|
|
47,409
|
|
|
|
54,369
|
|
|
(13
|
)%
|
|
|
2
|
%
|
|
Spine Fixation
|
|
|
|
35,669
|
|
|
|
43,117
|
|
|
(17
|
)%
|
|
|
(17
|
)%
|
|
Total net sales
|
|
|
$
|
190,716
|
|
|
$
|
200,999
|
|
|
(5
|
)%
|
|
|
(1
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Margin by SBU
The following table provides net margin by SBU for the three and six
months ended June 30, 2015 and 2014, respectively:
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|
|
|
June 30,
|
|
|
June 30,
|
|
(Unaudited, U.S. Dollars, in thousands)
|
|
|
2015
|
|
|
2014
|
|
|
2015
|
|
|
2014
|
|
Net Margin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BioStim
|
|
|
$
|
16,787
|
|
|
|
$
|
17,706
|
|
|
|
$
|
30,800
|
|
|
|
$
|
32,726
|
|
|
Biologics
|
|
|
|
7,285
|
|
|
|
|
6,496
|
|
|
|
|
13,229
|
|
|
|
|
12,997
|
|
|
Extremity Fixation
|
|
|
|
9,149
|
|
|
|
|
6,656
|
|
|
|
|
16,165
|
|
|
|
|
13,590
|
|
|
Spine Fixation
|
|
|
|
3,173
|
|
|
|
|
3,130
|
|
|
|
|
2,644
|
|
|
|
|
7,189
|
|
|
Corporate
|
|
|
|
(296
|
)
|
|
|
|
(430
|
)
|
|
|
|
(602
|
)
|
|
|
|
(874
|
)
|
|
Total net margin
|
|
|
$
|
36,098
|
|
|
|
$
|
33,558
|
|
|
|
$
|
62,236
|
|
|
|
$
|
65,628
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As a % of net sales
|
|
|
|
35.8
|
%
|
|
|
|
33.2
|
%
|
|
|
|
32.6
|
%
|
|
|
|
32.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
The following table reconciles reported net income (loss) from
continuing operations to EBITDA (earnings before net interest expense,
income tax provision, depreciation and amortization) and adjusted EBITDA
for the three and six months ended June 30, 2015 and 2014. Please refer
to the Non-GAAP Performance Measures section at the end of this press
release for more information about the specified items below.
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|
|
|
June 30,
|
|
|
June 30,
|
|
(Unaudited, U.S. Dollars, in thousands)
|
|
|
2015
|
|
|
2014
|
|
|
2015
|
|
|
2014
|
|
Net income (loss) from continuing operations
|
|
|
$
|
4,077
|
|
|
|
$
|
3,266
|
|
|
|
$
|
(3,660
|
)
|
|
|
$
|
1,318
|
|
|
Interest (income) expense, net
|
|
|
|
(74
|
)
|
|
|
|
492
|
|
|
|
|
198
|
|
|
|
|
960
|
|
|
Income tax expense
|
|
|
|
1,778
|
|
|
|
|
3,309
|
|
|
|
|
2,742
|
|
|
|
|
4,488
|
|
|
Depreciation and amortization
|
|
|
|
5,267
|
|
|
|
|
5,913
|
|
|
|
|
10,575
|
|
|
|
|
11,516
|
|
|
EBITDA
|
|
|
$
|
11,048
|
|
|
|
$
|
12,980
|
|
|
|
$
|
9,855
|
|
|
|
$
|
18,282
|
|
|
Share-based compensation
|
|
|
|
1,800
|
|
|
|
|
1,186
|
|
|
|
|
3,576
|
|
|
|
|
2,373
|
|
|
Foreign exchange impact
|
|
|
|
(643
|
)
|
|
|
|
(251
|
)
|
|
|
|
1,678
|
|
|
|
|
(320
|
)
|
|
Strategic investments
|
|
|
|
440
|
|
|
|
|
—
|
|
|
|
|
901
|
|
|
|
|
—
|
|
|
Restatements and related costs
|
|
|
|
2,213
|
|
|
|
|
2,327
|
|
|
|
|
8,129
|
|
|
|
|
10,633
|
|
|
Infrastructure investments
|
|
|
|
1,303
|
|
|
|
|
—
|
|
|
|
|
3,462
|
|
|
|
|
—
|
|
|
Legal judgment
|
|
|
|
1,066
|
|
|
|
|
—
|
|
|
|
|
1,066
|
|
|
|
|
—
|
|
|
Gain on sale of assets
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(3,100
|
)
|
|
|
|
—
|
|
|
Adjusted EBITDA
|
|
|
$
|
17,227
|
|
|
|
$
|
16,242
|
|
|
|
$
|
25,567
|
|
|
|
$
|
30,968
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As a % of net sales
|
|
|
|
17.1
|
%
|
|
|
|
16.1
|
%
|
|
|
|
13.4
|
%
|
|
|
|
15.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income from Continuing Operations
The following table reconciles reported net income (loss) from
continuing operations to adjusted net income from continuing operations
for the three and six months ended June 30, 2015 and 2014. Amounts are
shown net of tax. Please refer to the Non-GAAP Performance Measures
section at the end of this press release for more information about the
specified items below.
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|
|
|
June 30,
|
|
|
June 30,
|
|
(Unaudited, U.S. Dollars, in thousands)
|
|
|
2015
|
|
|
2014
|
|
|
2015
|
|
|
2014
|
|
Net income (loss) from continuing operations
|
|
|
$
|
4,077
|
|
|
|
$
|
3,266
|
|
|
|
$
|
(3,660
|
)
|
|
|
$
|
1,318
|
|
|
Foreign exchange impact
|
|
|
|
(404
|
)
|
|
|
|
(158
|
)
|
|
|
|
1,057
|
|
|
|
|
(202
|
)
|
|
Strategic investments
|
|
|
|
277
|
|
|
|
|
—
|
|
|
|
|
568
|
|
|
|
|
—
|
|
|
Restatements and related costs
|
|
|
|
1,394
|
|
|
|
|
1,466
|
|
|
|
|
5,121
|
|
|
|
|
6,699
|
|
|
Infrastructure investments
|
|
|
|
821
|
|
|
|
|
—
|
|
|
|
|
2,181
|
|
|
|
|
—
|
|
|
Legal judgment
|
|
|
|
672
|
|
|
|
|
—
|
|
|
|
|
672
|
|
|
|
|
—
|
|
|
Gain on sale of assets
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(1,953
|
)
|
|
|
|
—
|
|
|
Adjusted net income from continuing operations
|
|
|
$
|
6,837
|
|
|
|
$
|
4,574
|
|
|
|
$
|
3,986
|
|
|
|
$
|
7,815
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table reconciles reported earnings per diluted share (EPS)
from continuing operations to adjusted earnings per diluted share from
continuing operations for the three and six months ended June 30,
2015 and 2014. Some calculations may be impacted by rounding and are
shown net of tax. Please refer to the Non-GAAP Performance Measures
section at the end of this press release for more information about the
specified items below.
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|
|
|
June 30,
|
|
|
June 30,
|
|
(Unaudited, per diluted share)
|
|
|
2015
|
|
|
2014
|
|
|
2015
|
|
|
2014
|
|
EPS from continuing operations
|
|
|
$
|
0.21
|
|
|
|
$
|
0.18
|
|
|
|
$
|
(0.20
|
)
|
|
|
$
|
0.07
|
|
|
Foreign exchange impact
|
|
|
|
(0.02
|
)
|
|
|
|
(0.01
|
)
|
|
|
|
0.06
|
|
|
|
|
(0.01
|
)
|
|
Strategic investments
|
|
|
|
0.02
|
|
|
|
|
—
|
|
|
|
|
0.03
|
|
|
|
|
—
|
|
|
Restatements and related costs
|
|
|
|
0.07
|
|
|
|
|
0.08
|
|
|
|
|
0.27
|
|
|
|
|
0.36
|
|
|
Infrastructure investments
|
|
|
|
0.04
|
|
|
|
|
—
|
|
|
|
|
0.11
|
|
|
|
|
—
|
|
|
Legal judgment
|
|
|
|
0.04
|
|
|
|
|
—
|
|
|
|
|
0.04
|
|
|
|
|
—
|
|
|
Gain on sale of assets
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(0.10
|
)
|
|
|
|
—
|
|
|
Adjusted EPS from continuing operations
|
|
|
$
|
0.36
|
|
|
|
$
|
0.25
|
|
|
|
$
|
0.21
|
|
|
|
$
|
0.42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow Data
The following table reconciles net cash provided by operating activities
to free cash flow for the six months ended June 30, 2015 and 2014.
Please refer to the Non-GAAP Performance Measures section at the end of
this press release for more information about the specified items below.
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
|
|
June 30,
|
|
(Unaudited, U.S. Dollars, in thousands)
|
|
|
2015
|
|
|
2014
|
|
Net cash provided by operating activities
|
|
|
$
|
8,954
|
|
|
|
$
|
17,874
|
|
|
Less: capital expenditures
|
|
|
|
(13,576
|
)
|
|
|
|
(6,257
|
)
|
|
Free cash flow
|
|
|
$
|
(4,622
|
)
|
|
|
$
|
11,617
|
|
|
|
|
|
|
|
|
|
Net Margin
The following table reconciles gross profit to net margin for the three
and six months ended June 30, 2015 and 2014. Please refer to the
Non-GAAP Performance Measures section at the end of this press release
for more information about the specified items below.
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|
|
|
June 30,
|
|
|
June 30,
|
|
(Unaudited, U.S. Dollars in thousands)
|
|
|
2015
|
|
|
2014
|
|
|
2015
|
|
|
2014
|
|
Gross profit
|
|
|
$
|
79,044
|
|
|
|
$
|
75,571
|
|
|
|
$
|
149,467
|
|
|
|
$
|
148,812
|
|
|
Less: sales and marketing
|
|
|
|
(42,946
|
)
|
|
|
|
(42,013
|
)
|
|
|
|
(87,231
|
)
|
|
|
|
(83,184
|
)
|
|
Total net margin
|
|
|
$
|
36,098
|
|
|
|
$
|
33,558
|
|
|
|
$
|
62,236
|
|
|
|
$
|
65,628
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Performance Measures
The tables in this press release present reconciliations of net income
(loss) from continuing operations and net income (loss) from continuing
operations per diluted share calculated in accordance with U.S. GAAP to
non-GAAP performance measures, referred to as "EBITDA," "Adjusted
EBITDA," "Adjusted net income from continuing operations," "Adjusted
earnings per diluted share," "Free cash flow" and "Net margin" that
exclude the items specified in the tables. A more detailed explanation
of the items excluded from these non-GAAP measures, as well as why
management believes the non-GAAP measures are useful to them, is
included in the Reconciliations of Non-GAAP Performance Measures section
below. Certain calculations for prior periods which have been previously
presented have been conformed to our current calculation methodology.
Reconciliations of Non-GAAP Performance Measures
Reconciling Items for Adjusted EBITDA, Adjusted Net Income from
Continuing Operations and Adjusted Earnings Per Diluted Share from
Continuing Operations
-
Shared-based compensation - costs related to the Company's
share-based compensation plans, which include stock options,
restricted stock awards, performance-based restricted stock awards (if
applicable), and the Company's stock purchase plan.
-
Foreign exchange impact - gains and losses related to foreign
exchange transactions.
-
Strategic investments - costs related to the Company's
strategic investments such as our investment in eNeura, Inc.
-
Restatements and related costs - legal, accounting, and other
professional costs related to the Company's accounting review and
restatements through March 2015 and legal fees associated with the
ongoing SEC Investigation and Securities Class Action Complaint.
-
Infrastructure investments - costs associated with our
multi-year process and systems improvement effort, "Bluecore."
-
Legal judgment - judgment against the Company related to a
lawsuit filed by a former distributor.
-
Gain on sale of assets - gain on the sale of the Company's
TempusTM Cervical Plate product line.
Free cash flow
Free cash flow is a non-GAAP financial measure, which is calculated by
subtracting capital expenditures from cash flow from operating
activities. Free cash flow is an important indicator of how much cash is
generated or used by our normal business operations, including capital
expenditures. Management uses free cash flow as a measure of progress on
its capital efficiency and cash flow initiatives.
Net Margin
Net margin is a non-GAAP financial measure, which is calculated by
subtracting sales and marketing from gross profit. Net margin is the
primary metric used by the Company's Chief Operating Decision Maker in
managing the Company.
Management use of, and economic substance behind, Non-GAAP
Performance Measures
Management uses non-GAAP measures to evaluate performance
period-over-period, to analyze the underlying trends in the Company's
business, to assess its performance relative to its competitors and to
establish operational goals and forecasts that are used in allocating
resources. Management uses these non-GAAP measures as the basis for
assessing the ability of the underlying operations to generate cash. In
addition, management uses these non-GAAP measures to further its
understanding of the performance of the Company's business units. The
items excluded from Orthofix's non-GAAP measures are also excluded from
the profit or loss reported by the Company's business units for the
purpose of analyzing their performance.
Material Limitations Associated with the Use of Non-GAAP Measures
The non-GAAP measures used in this press release may have limitations as
analytical tools, and should not be considered in isolation or as a
replacement for U.S. GAAP performance measures. Some of the limitations
associated with the use of these non-GAAP performance measures are that
they exclude items that reflect an economic cost to the Company and can
have a material effect on cash flows. Similarly, equity compensation
expense does not directly impact cash flows, but is part of total
compensation costs accounted for under U.S. GAAP.
Compensation for Limitations Associated with Use of Non-GAAP Measures
Orthofix compensates for the limitations of its non-GAAP performance
measures by relying upon its U.S. GAAP results to gain a complete
picture of the Company's performance. The U.S. GAAP results provide the
ability to understand the Company's performance based on a defined set
of criteria. The non-GAAP measures reflect the underlying operating
results of the Company's businesses, excluding non-cash items, which
management believes is an important measure of the Company's overall
performance. The Company provides a detailed reconciliation of the
non-GAAP performance measures to their most directly comparable U.S.
GAAP measures, and encourages investors to review this reconciliation.
Usefulness of Non-GAAP Measures to Investors
Orthofix believes that providing non-GAAP measures that exclude certain
items provides investors with greater transparency to the information
used by the Company's senior management in its financial and operational
decision-making. Management believes it is important to provide
investors with the same non-GAAP metrics it uses to supplement
information regarding the performance and underlying trends
of Orthofix's business operations in order to facilitate comparisons to
its historical operating results and internally evaluate the
effectiveness of the Company's operating strategies. Disclosure of these
non-GAAP performance measures also facilitates comparisons
of Orthofix's underlying operating performance with other companies in
its industry that also supplement their U.S. GAAP results with non-GAAP
performance measures.
View source version on businesswire.com: http://www.businesswire.com/news/home/20150804006644/en/
Orthofix International N.V.
Mark Quick, 214-937-2924
markquick@orthofix.com
Source: Orthofix International N.V.
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