Fourth Quarter Highlights
-
Net sales of $108.5 million, an increase of 3.7% compared to prior
year and 4.2% on a constant currency basis
-
Net loss from continuing operations of $5.1 million; compared to net
income of $2.1 million in the prior year
-
Adjusted EBITDA of $21.1 million; an increase of $1.8 million, or
9.4%, over prior year
Fiscal Year 2016 Highlights
-
Net sales of $409.8 million, an increase of 3.4% compared to prior
year and 4.0% on a constant currency basis
-
Net income from continuing operations of $3.5 million; an increase of
$5.8 million over prior year
-
Adjusted EBITDA of $79.3 million; an increase of $18.6 million, or
30.6%, over prior year
LEWISVILLE, Texas--(BUSINESS WIRE)--
Orthofix International N.V. (NASDAQ:OFIX) today reported its financial
results for the fourth quarter and fiscal year ended December 31, 2016.
For the fourth quarter of 2016, net sales were $108.5 million, loss per
share from continuing operations was ($0.29) and adjusted earnings per
share from continuing operations was $0.42. For fiscal year 2016, net
sales were $409.8 million, earnings per share from continuing operations
was $0.19 and adjusted earnings per share from continuing operations was
$1.46.
"We are very proud of what we accomplished in 2016 and are encouraged by
our momentum at year-end," commented Brad Mason, President and Chief
Executive Officer. "We improved our performance during the year in
almost every aspect of our business and exited an era of heavy
investment with a rebuilt infrastructure, robust compliance program,
rigorous financial controls, strong balance sheet, excellent free cash
flow and great momentum in our BioStim and Extremity Fixation
businesses. Looking ahead to the next chapter for Orthofix, we are now
well positioned and committed to execute on both organic and inorganic
strategic opportunities focused on accelerating shareholder value
creation."
Financial Results Overview
Fourth Quarter
The following table provides net sales by strategic business unit
("SBU"):
|
|
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
(Unaudited, U.S. Dollars, in thousands)
|
|
|
2016
|
|
|
2015
|
|
|
Change
|
|
|
Constant
Currency
Change
|
|
BioStim
|
|
|
$
|
47,803
|
|
|
$
|
44,993
|
|
|
6.2
|
%
|
|
|
6.2
|
%
|
|
Biologics
|
|
|
|
15,227
|
|
|
|
15,958
|
|
|
(4.6
|
%)
|
|
|
(4.6
|
%)
|
|
Extremity Fixation
|
|
|
|
26,843
|
|
|
|
23,931
|
|
|
12.2
|
%
|
|
|
14.3
|
%
|
|
Spine Fixation
|
|
|
|
18,664
|
|
|
|
19,740
|
|
|
(5.5
|
%)
|
|
|
(5.6
|
%)
|
|
Net sales
|
|
|
$
|
108,537
|
|
|
$
|
104,622
|
|
|
3.7
|
%
|
|
|
4.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit increased $2.0 million to $85.2 million. Gross margin
decreased to 78.5% compared to 79.5% in the prior year period, primarily
due to an increase in the mix of net sales from our Extremity Fixation
SBU, which have lower margins than our regenerative products. Net margin
(gross profit less sales and marketing expenses) was $36.5 million, a
decrease of 5.1% compared to $38.5 million in the prior year period. The
decrease in net margin was primarily due to higher sales and marketing
expenses, driven by higher compensation costs, including commissions.
Net loss from continuing operations was $5.1 million, or ($0.29) per
share, compared to net income of $2.1 million, or $0.11 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
$7.6 million, or $0.40 per share in the prior year period.
EBITDA was $8.6 million, compared to $12.5 million in the prior year
period. Adjusted EBITDA was $21.1 million or 19.4% of net sales for the
fourth quarter, compared to $19.3 million or 18.4% of net sales in the
prior year period.
Fiscal Year 2016
The following table provides net sales by SBU:
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
(Unaudited, U.S. Dollars, in thousands)
|
|
|
2016
|
|
|
2015
|
|
|
Change
|
|
|
Constant
Currency
Change
|
|
BioStim
|
|
|
$
|
176,561
|
|
|
$
|
164,955
|
|
|
7.0
|
%
|
|
|
7.0
|
%
|
|
Biologics
|
|
|
|
57,912
|
|
|
|
59,832
|
|
|
(3.2
|
%)
|
|
|
(3.2
|
%)
|
|
Extremity Fixation
|
|
|
|
102,683
|
|
|
|
96,034
|
|
|
6.9
|
%
|
|
|
9.6
|
%
|
|
Spine Fixation
|
|
|
|
72,632
|
|
|
|
75,668
|
|
|
(4.0
|
%)
|
|
|
(4.0
|
%)
|
|
Net sales
|
|
|
$
|
409,788
|
|
|
$
|
396,489
|
|
|
3.4
|
%
|
|
|
4.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit increased $12.0 million to $321.9 million and gross margin
increased to 78.6% compared to 78.2% in the prior year period. The
increase in gross profit and gross margin was driven by an increase in
sales, an increase in sales mix for our BioStim products, and lower
fixed costs. Net margin was $140.6 million, an increase of 6.6% compared
to $131.9 million in the prior year period. The increase in net margin
was due to the higher gross profit, partially offset by higher sales and
marketing expenses, including an increase in commissions as a result of
the increase in net sales.
Net income from continuing operations was $3.5 million, or $0.19 per
share, compared to net loss of $2.3 million, or ($0.12) per share in the
prior year. Adjusted net income from continuing operations was $27.0
million, or $1.46 per share, compared to adjusted net income of $19.9
million, or $1.05 per share in the prior year.
EBITDA was $39.1 million, compared to $29.9 million in the prior year.
Adjusted EBITDA was $79.3 million or 19.4% of net sales for the year,
compared to $60.7 million or 15.3% of net sales in the prior year.
Liquidity
As of December 31, 2016, cash and cash equivalents were $39.6 million
compared to $63.7 million as of December 31, 2015. The decrease in cash
and cash equivalents is due primarily to the repurchase of shares and
funding the settlements with the SEC. As of December 31, 2016, we had no
outstanding indebtedness and borrowing capacity of $125 million. Cash
flow from operations increased $1.1 million to $44.7 million, while free
cash flow increased $10.7 million to $26.4 million.
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.
|
|
|
|
|
|
|
|
|
2017 Outlook
|
|
(Unaudited, U.S. Dollars, in millions, except per share data)
|
|
|
Low
|
|
|
High
|
|
Net sales
|
|
|
$
|
407.0
|
|
1
|
|
|
$
|
411.0
|
|
1
|
|
Net income from continuing operations
|
|
|
$
|
24.4
|
|
2
|
|
|
$
|
29.3
|
|
2
|
|
Adjusted EBITDA
|
|
|
$
|
76.0
|
|
3
|
|
|
$
|
79.0
|
|
3
|
|
EPS from continuing operations
|
|
|
$
|
1.33
|
|
4
|
|
|
$
|
1.59
|
|
4
|
|
Adjusted EPS from continuing operations
|
|
|
$
|
1.48
|
|
5
|
|
|
$
|
1.58
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
|
Represents a year-over-year decrease of 0.7% to a year-over-year
increase of 0.3% on a reported basis
|
|
2 |
|
Represents a year-over-year increase of 597.7% to 737.9%
|
|
3 |
|
Represents a year-over-year decrease of 0.4% to 4.2%
|
|
4 |
|
Represents a year-over-year increase of 600.0% to 736.8%
|
|
5 |
|
Represents a year-over-year increase of 1.4% to 8.2%
|
|
|
|
|
Conference Call
Orthofix will host a conference call today at 4:30 PM Eastern time to
discuss the Company's financial results for the fourth quarter and
fiscal year 2016. Interested parties may access the conference call by
dialing (866) 454-4209 in the U.S. and (913) 312-0839 outside the U.S.,
and referencing the conference ID 2108139. 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 2108139. 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, including the
risks described in Part I, Item 1A, "Risk Factors" of our 2016 Annual
Report on Form 10-K. 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, to reflect new information, the
occurrence of future events or circumstances or otherwise.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ORTHOFIX INTERNATIONAL N.V.
|
|
Consolidated Statements of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Year Ended
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
(Unaudited, U.S. Dollars, in thousands, except share and per
share data)
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Net sales
|
|
|
$
|
108,537
|
|
|
|
$
|
104,622
|
|
|
|
$
|
409,788
|
|
|
|
$
|
396,489
|
|
|
Cost of sales
|
|
|
|
23,320
|
|
|
|
|
21,411
|
|
|
|
|
87,853
|
|
|
|
|
86,525
|
|
|
Gross profit
|
|
|
|
85,217
|
|
|
|
|
83,211
|
|
|
|
|
321,935
|
|
|
|
|
309,964
|
|
|
Sales and marketing
|
|
|
|
48,705
|
|
|
|
|
44,720
|
|
|
|
|
181,287
|
|
|
|
|
178,080
|
|
|
General and administrative
|
|
|
|
21,063
|
|
|
|
|
23,734
|
|
|
|
|
74,404
|
|
|
|
|
87,157
|
|
|
Research and development
|
|
|
|
7,509
|
|
|
|
|
7,570
|
|
|
|
|
28,803
|
|
|
|
|
26,389
|
|
|
Restatements and related costs
|
|
|
|
524
|
|
|
|
|
(193
|
)
|
|
|
|
2,005
|
|
|
|
|
9,083
|
|
|
Charges related to U.S. Government resolutions
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
14,369
|
|
|
|
|
—
|
|
|
Operating income
|
|
|
|
7,416
|
|
|
|
|
7,380
|
|
|
|
|
21,067
|
|
|
|
|
9,255
|
|
|
Interest income (expense), net
|
|
|
|
443
|
|
|
|
|
(166
|
)
|
|
|
|
763
|
|
|
|
|
(489
|
)
|
|
Other expense, net
|
|
|
|
(4,152
|
)
|
|
|
|
(67
|
)
|
|
|
|
(2,806
|
)
|
|
|
|
(259
|
)
|
|
Income before income taxes
|
|
|
|
3,707
|
|
|
|
|
7,147
|
|
|
|
|
19,024
|
|
|
|
|
8,507
|
|
|
Income tax expense
|
|
|
|
(8,824
|
)
|
|
|
|
(5,041
|
)
|
|
|
|
(15,527
|
)
|
|
|
|
(10,849
|
)
|
|
Net income (loss) from continuing operations
|
|
|
|
(5,117
|
)
|
|
|
|
2,106
|
|
|
|
|
3,497
|
|
|
|
|
(2,342
|
)
|
|
Discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from discontinued operations
|
|
|
|
2,942
|
|
|
|
|
488
|
|
|
|
|
(638
|
)
|
|
|
|
(1,827
|
)
|
|
Income tax (expense) benefit
|
|
|
|
(1,061
|
)
|
|
|
|
775
|
|
|
|
|
197
|
|
|
|
|
1,360
|
|
|
Net income (loss) from discontinued operations
|
|
|
|
1,881
|
|
|
|
|
1,263
|
|
|
|
|
(441
|
)
|
|
|
|
(467
|
)
|
|
Net income (loss)
|
|
|
$
|
(3,236
|
)
|
|
|
$
|
3,369
|
|
|
|
$
|
3,056
|
|
|
|
$
|
(2,809
|
)
|
|
Net income (loss) per common share—basic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) from continuing operations
|
|
|
$
|
(0.29
|
)
|
|
|
$
|
0.11
|
|
|
|
$
|
0.19
|
|
|
|
$
|
(0.12
|
)
|
|
Net income (loss) from discontinued operations
|
|
|
|
0.11
|
|
|
|
|
0.07
|
|
|
|
|
(0.02
|
)
|
|
|
|
(0.03
|
)
|
|
Net income (loss) per common share—basic
|
|
|
$
|
(0.18
|
)
|
|
|
$
|
0.18
|
|
|
|
$
|
0.17
|
|
|
|
$
|
(0.15
|
)
|
|
Net income (loss) per common share—diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) from continuing operations
|
|
|
$
|
(0.29
|
)
|
|
|
$
|
0.11
|
|
|
|
$
|
0.19
|
|
|
|
$
|
(0.12
|
)
|
|
Net income (loss) from discontinued operations
|
|
|
|
0.11
|
|
|
|
|
0.07
|
|
|
|
|
(0.02
|
)
|
|
|
|
(0.03
|
)
|
|
Net income (loss) per common share—diluted
|
|
|
$
|
(0.18
|
)
|
|
|
$
|
0.18
|
|
|
|
$
|
0.17
|
|
|
|
$
|
(0.15
|
)
|
|
Weighted average number of common shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
17,862,531
|
|
|
|
|
18,823,455
|
|
|
|
|
18,144,019
|
|
|
|
|
18,795,194
|
|
|
Diluted
|
|
|
|
17,862,531
|
|
|
|
|
19,059,779
|
|
|
|
|
18,463,161
|
|
|
|
|
18,795,194
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ORTHOFIX INTERNATIONAL N.V.
|
|
Consolidated Balance Sheets
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
(U.S. Dollars, in thousands except share data)
|
|
|
2016
|
|
|
2015
|
|
Assets
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
39,572
|
|
|
|
$
|
63,663
|
|
|
Restricted cash
|
|
|
|
14,369
|
|
|
|
|
—
|
|
|
Trade accounts receivable, less allowance for doubtful accounts of
$8,396 and $8,923 at December 31, 2016 and December 31, 2015,
respectively
|
|
|
|
57,848
|
|
|
|
|
59,839
|
|
|
Inventories
|
|
|
|
63,346
|
|
|
|
|
57,563
|
|
|
Prepaid expenses and other current assets
|
|
|
|
19,238
|
|
|
|
|
31,187
|
|
|
Total current assets
|
|
|
|
194,373
|
|
|
|
|
212,252
|
|
|
Property, plant and equipment, net
|
|
|
|
48,916
|
|
|
|
|
52,306
|
|
|
Patents and other intangible assets, net
|
|
|
|
7,461
|
|
|
|
|
5,302
|
|
|
Goodwill |
|
|
|
53,565
|
|
|
|
|
53,565
|
|
|
Deferred income taxes
|
|
|
|
47,325
|
|
|
|
|
57,306
|
|
|
Other long-term assets
|
|
|
|
20,463
|
|
|
|
|
19,491
|
|
|
Total assets
|
|
|
$
|
372,103
|
|
|
|
$
|
400,222
|
|
|
Liabilities and shareholders' equity
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
Trade accounts payable
|
|
|
$
|
14,353
|
|
|
|
$
|
16,391
|
|
|
Other current liabilities
|
|
|
|
69,088
|
|
|
|
|
65,597
|
|
|
Total current liabilities
|
|
|
|
83,441
|
|
|
|
|
81,988
|
|
|
Other long-term liabilities
|
|
|
|
25,185
|
|
|
|
|
27,923
|
|
|
Total liabilities
|
|
|
|
108,626
|
|
|
|
|
109,911
|
|
|
Contingencies
|
|
|
|
|
|
|
|
Shareholders' equity
|
|
|
|
|
|
|
|
Common shares $0.10 par value; 50,000,000 shares authorized;
17,828,155 and 18,659,696 issued and outstanding as of December
31, 2016 and 2015, respectively
|
|
|
|
1,783
|
|
|
|
|
1,866
|
|
|
Additional paid-in capital
|
|
|
|
204,095
|
|
|
|
|
232,126
|
|
|
Retained earnings
|
|
|
|
64,179
|
|
|
|
|
62,551
|
|
|
Accumulated other comprehensive loss
|
|
|
|
(6,580
|
)
|
|
|
|
(6,232
|
)
|
|
Total shareholders' equity
|
|
|
|
263,477
|
|
|
|
|
290,311
|
|
|
Total liabilities and shareholders' equity
|
|
|
$
|
372,103
|
|
|
|
$
|
400,222
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ORTHOFIX INTERNATIONAL N.V.
Non-GAAP Financial Measures
The following tables present reconciliations of net income (loss) from
continuing operations, earnings per share 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," "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
December 31,
|
|
|
Year Ended
December 31,
|
|
(Unaudited, U.S. Dollars, in thousands)
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Net income (loss) from continuing operations
|
|
|
$
|
(5,117
|
)
|
|
|
$
|
2,106
|
|
|
|
$
|
3,497
|
|
|
|
$
|
(2,342
|
)
|
|
Interest expense (income), net
|
|
|
|
(443
|
)
|
|
|
|
166
|
|
|
|
|
(763
|
)
|
|
|
|
489
|
|
|
Income tax expense
|
|
|
|
8,824
|
|
|
|
|
5,041
|
|
|
|
|
15,527
|
|
|
|
|
10,849
|
|
|
Depreciation and amortization
|
|
|
|
5,358
|
|
|
|
|
5,177
|
|
|
|
|
20,841
|
|
|
|
|
20,923
|
|
|
EBITDA
|
|
|
$
|
8,622
|
|
|
|
$
|
12,490
|
|
|
|
$
|
39,102
|
|
|
|
$
|
29,919
|
|
|
Share-based compensation
|
|
|
|
3,812
|
|
|
|
|
1,689
|
|
|
|
|
15,686
|
|
|
|
|
7,214
|
|
|
Foreign exchange impact
|
|
|
|
1,475
|
|
|
|
|
115
|
|
|
|
|
41
|
|
|
|
|
3,489
|
|
|
Strategic investments
|
|
|
|
2,726
|
|
|
|
|
258
|
|
|
|
|
3,068
|
|
|
|
|
1,359
|
|
|
Restatements and related costs
|
|
|
|
524
|
|
|
|
|
(193
|
)
|
|
|
|
2,005
|
|
|
|
|
9,083
|
|
|
Infrastructure investments
|
|
|
|
478
|
|
|
|
|
675
|
|
|
|
|
3,551
|
|
|
|
|
5,407
|
|
|
Legal judgments/settlements
|
|
|
|
1,446
|
|
|
|
|
4,237
|
|
|
|
|
(1,554
|
)
|
|
|
|
5,302
|
|
|
Gain on sale of assets
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(3,099
|
)
|
|
Puerto Rico |
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
2,024
|
|
|
Charges related to U.S. Government resolutions
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
14,369
|
|
|
|
|
—
|
|
|
International restructuring
|
|
|
|
1,964
|
|
|
|
|
—
|
|
|
|
|
1,964
|
|
|
|
|
—
|
|
|
Succession charges
|
|
|
|
40
|
|
|
|
|
—
|
|
|
|
|
1,066
|
|
|
|
|
—
|
|
|
Adjusted EBITDA
|
|
|
$
|
21,087
|
|
|
|
$
|
19,271
|
|
|
|
$
|
79,298
|
|
|
|
$
|
60,698
|
|
|
As a % of net sales
|
|
|
|
19.4
|
%
|
|
|
|
18.4
|
%
|
|
|
|
19.4
|
%
|
|
|
|
15.3
|
%
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income from Continuing Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
|
Year Ended
December 31,
|
|
(Unaudited, U.S. Dollars, in thousands)
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Net income (loss) from continuing operations
|
|
|
$
|
(5,117
|
)
|
|
|
$
|
2,106
|
|
|
|
$
|
3,497
|
|
|
|
$
|
(2,342
|
)
|
|
Foreign exchange impact
|
|
|
|
1,475
|
|
|
|
|
115
|
|
|
|
|
41
|
|
|
|
|
3,489
|
|
|
Strategic investments
|
|
|
|
2,726
|
|
|
|
|
258
|
|
|
|
|
3,068
|
|
|
|
|
1,359
|
|
|
Restatements and related costs
|
|
|
|
524
|
|
|
|
|
(193
|
)
|
|
|
|
2,005
|
|
|
|
|
9,083
|
|
|
Infrastructure investments
|
|
|
|
478
|
|
|
|
|
675
|
|
|
|
|
3,551
|
|
|
|
|
5,407
|
|
|
Legal judgments/settlements
|
|
|
|
1,446
|
|
|
|
|
4,237
|
|
|
|
|
(1,554
|
)
|
|
|
|
5,302
|
|
|
Gain on sale of assets
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(3,099
|
)
|
|
Puerto Rico |
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
2,024
|
|
|
Charges related to U.S. Government resolutions
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
14,369
|
|
|
|
|
—
|
|
|
International restructuring
|
|
|
|
1,964
|
|
|
|
|
—
|
|
|
|
|
1,964
|
|
|
|
|
—
|
|
|
Succession charges
|
|
|
|
40
|
|
|
|
|
—
|
|
|
|
|
1,066
|
|
|
|
|
—
|
|
|
Long-term income tax rate adjustment
|
|
|
|
4,127
|
|
|
|
|
390
|
|
|
|
|
(1,016
|
)
|
|
|
|
(1,338
|
)
|
|
Adjusted net income from continuing operations
|
|
|
$
|
7,663
|
|
|
|
$
|
7,588
|
|
|
|
$
|
26,991
|
|
|
|
$
|
19,885
|
|
|
|
|
|
|
|
|
|
|
Adjusted Earnings per Share from Continuing Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
|
Year Ended
December 31,
|
|
(Unaudited, per diluted share)
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
EPS from continuing operations
|
|
|
$
|
(0.29
|
)
|
|
|
$
|
0.11
|
|
|
|
$
|
0.19
|
|
|
|
$
|
(0.12
|
)
|
|
Foreign exchange impact
|
|
|
|
0.08
|
|
|
|
|
0.01
|
|
|
|
|
—
|
|
|
|
|
0.18
|
|
|
Strategic investments
|
|
|
|
0.15
|
|
|
|
|
0.01
|
|
|
|
|
0.16
|
|
|
|
|
0.07
|
|
|
Restatements and related costs
|
|
|
|
0.03
|
|
|
|
|
(0.01
|
)
|
|
|
|
0.11
|
|
|
|
|
0.48
|
|
|
Infrastructure investments
|
|
|
|
0.03
|
|
|
|
|
0.04
|
|
|
|
|
0.19
|
|
|
|
|
0.28
|
|
|
Legal judgments/settlements
|
|
|
|
0.08
|
|
|
|
|
0.22
|
|
|
|
|
(0.08
|
)
|
|
|
|
0.28
|
|
|
Gain on sale of assets
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(0.16
|
)
|
|
Puerto Rico |
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
0.11
|
|
|
Charges related to U.S. Government resolutions
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
0.78
|
|
|
|
|
—
|
|
|
International restructuring
|
|
|
|
0.11
|
|
|
|
|
—
|
|
|
|
|
0.11
|
|
|
|
|
—
|
|
|
Succession charges
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
0.06
|
|
|
|
|
—
|
|
|
Long-term income tax rate adjustment
|
|
|
|
0.23
|
|
|
|
|
0.02
|
|
|
|
|
(0.06
|
)
|
|
|
|
(0.07
|
)
|
|
Adjusted EPS from continuing operations
|
|
|
$
|
0.42
|
|
|
|
$
|
0.40
|
|
|
|
$
|
1.46
|
|
|
|
$
|
1.05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of diluted common shares
|
|
|
|
18,148,655
|
|
|
|
|
19,059,779
|
|
|
|
|
18,463,161
|
|
|
|
|
19,016,230
|
|
|
|
|
|
|
|
|
|
|
Net Margin
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
|
Year Ended
December 31,
|
|
(Unaudited, U.S. Dollars, in thousands)
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Gross profit
|
|
|
$
|
85,217
|
|
|
|
$
|
83,211
|
|
|
|
$
|
321,935
|
|
|
|
$
|
309,964
|
|
|
Sales and marketing
|
|
|
|
(48,705
|
)
|
|
|
|
(44,720
|
)
|
|
|
|
(181,287
|
)
|
|
|
|
(178,080
|
)
|
|
Net margin
|
|
|
$
|
36,512
|
|
|
|
$
|
38,491
|
|
|
|
$
|
140,648
|
|
|
|
$
|
131,884
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BioStim
|
|
|
$
|
20,489
|
|
|
|
$
|
20,244
|
|
|
|
$
|
75,469
|
|
|
|
$
|
67,878
|
|
|
Biologics
|
|
|
|
7,249
|
|
|
|
|
7,701
|
|
|
|
|
26,891
|
|
|
|
|
27,226
|
|
|
Extremity Fixation
|
|
|
|
6,356
|
|
|
|
|
6,886
|
|
|
|
|
30,526
|
|
|
|
|
29,493
|
|
|
Spine Fixation
|
|
|
|
2,725
|
|
|
|
|
3,965
|
|
|
|
|
8,650
|
|
|
|
|
8,547
|
|
|
Corporate
|
|
|
|
(307
|
)
|
|
|
|
(305
|
)
|
|
|
|
(888
|
)
|
|
|
|
(1,260
|
)
|
|
Net margin
|
|
|
$
|
36,512
|
|
|
|
$
|
38,491
|
|
|
|
$
|
140,648
|
|
|
|
$
|
131,884
|
|
|
|
|
|
|
|
Free Cash Flow
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31,
|
|
(Unaudited, U.S. Dollars, in thousands)
|
|
|
2016
|
|
|
2015
|
|
Net cash from operating activities
|
|
|
$
|
44,707
|
|
|
|
$
|
43,610
|
|
|
Capital expenditures
|
|
|
|
(18,334
|
)
|
|
|
|
(27,899
|
)
|
|
Free cash flow
|
|
|
$
|
26,373
|
|
|
|
$
|
15,711
|
|
|
|
|
|
|
|
|
|
|
2017 Outlook
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 Outlook
|
|
(Unaudited, U.S. Dollars, in millions)
|
|
|
Low
|
|
|
High
|
|
Net income from continuing operations
|
|
|
$
|
24.4
|
|
|
|
$
|
29.3
|
|
|
Interest expense, net
|
|
|
|
0.1
|
|
|
|
|
0.2
|
|
|
Income tax expense
|
|
|
|
16.2
|
|
|
|
|
15.7
|
|
|
Depreciation and amortization
|
|
|
|
20.0
|
|
|
|
|
20.0
|
|
|
EBITDA
|
|
|
$
|
60.7
|
|
|
|
$
|
65.2
|
|
|
Share-based compensation
|
|
|
|
11.8
|
|
|
|
|
11.8
|
|
|
Strategic investments
|
|
|
|
1.2
|
|
|
|
|
0.7
|
|
|
Restatements and related costs
|
|
|
|
1.3
|
|
|
|
|
0.8
|
|
|
International restructuring
|
|
|
|
1.0
|
|
|
|
|
0.5
|
|
|
Adjusted EBITDA
|
|
|
$
|
76.0
|
|
|
|
$
|
79.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 Outlook
|
|
(Unaudited, per diluted share)
|
|
|
Low
|
|
|
High
|
|
EPS from continuing operations
|
|
|
$
|
1.33
|
|
|
|
$
|
1.59
|
|
|
Strategic investments
|
|
|
|
0.06
|
|
|
|
|
0.04
|
|
|
Restatements and related costs
|
|
|
|
0.07
|
|
|
|
|
0.04
|
|
|
International restructuring
|
|
|
|
0.05
|
|
|
|
|
0.03
|
|
|
Long-term income tax rate adjustment
|
|
|
|
(0.03
|
)
|
|
|
|
(0.12
|
)
|
|
Adjusted EPS from continuing operations
|
|
|
$
|
1.48
|
|
|
|
$
|
1.58
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of diluted common shares
|
|
|
|
18,400,000
|
|
|
|
|
18,400,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
-
Strategic investments - costs related to our strategic
investments, including our investment in eNeura, Inc.
-
Restatements and related costs - legal, accounting, and other
professional costs related to the accounting review and restatements
through March 2015 and legal fees associated with the SEC
Investigation, Securities Class Action Complaint and Brazil subsidiary
compliance review
-
Infrastructure investments - costs associated with our
multi-year process and systems improvement effort, "Bluecore"
-
Legal judgments/settlements - adverse or favorable legal
judgments or negotiated legal settlements
-
Gain on sale of assets - gain on the sale of the
Tempus Cervical Plate product line
-
Puerto Rico - bad debt expense in response to the recent
fiscal and economic difficulties experienced by the Puerto Rico
Commonwealth
-
Charges related to U.S. Government resolutions - charges
related to the settlement with the SEC as further discussed in our
Form 10-K for the year ended December 31, 2016
-
International restructuring - costs related to a planned
restructuring, primarily consisting of severance charges and the
write-down of certain assets
-
Succession charges - costs related to the succession of
certain of our former named executive officers
-
Long-term income tax rate adjustment - reflects management's
expectation of a long-term normalized effective tax rate of 38%, which
is based on current tax law and current expected income; actual tax
expense will ultimately be based on GAAP performance and may differ
from the 38% effective tax rate due to a variety of factors, including
the jurisdictions in which profits are determined to be earned and
taxed, the resolutions of issues arising from tax audits with various
tax authorities, and the ability to realize deferred tax assets
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 our Chief Operating Decision Maker in managing
our business.
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.
Usefulness and Limitations of Non-GAAP Financial Measures
Management uses non-GAAP measures to evaluate performance
period-over-period, to analyze the underlying trends in our business, to
assess performance relative to 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 our business units.
Material Limitations Associated with the Use of Non-GAAP Financial
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 GAAP financial measures. Some of the limitations
associated with the use of these non-GAAP financial measures are that
they exclude items that reflect an economic cost and can have a material
effect on cash flows. Similarly, certain non-cash expenses, such as
equity compensation, do not directly impact cash flows, but are part of
total compensation costs accounted for under GAAP.
Compensation for Limitations Associated with Use of Non-GAAP
Financial Measures
We compensate for the limitations of our non-GAAP financial measures by
relying upon GAAP results to gain a complete picture of our performance.
The GAAP results provide the ability to understand our performance based
on a defined set of criteria. The non-GAAP measures reflect the
underlying operating results of our businesses, which we believe is an
important measure of our overall performance. We provide a detailed
reconciliation of the non-GAAP financial measures to our most directly
comparable GAAP measures, and encourage investors to review this
reconciliation.
Usefulness of Non-GAAP Financial Measures to Investors
We believe that providing non-GAAP financial measures that exclude
certain items provides investors with greater transparency to the
information used by 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 our business operations in order to facilitate comparisons to its
historical operating results and internally evaluate the effectiveness
of our operating strategies. Disclosure of these non-GAAP financial
measures also facilitates comparisons of our underlying operating
performance with other companies in the industry that also supplement
their GAAP results with non-GAAP financial measures.
View source version on businesswire.com: http://www.businesswire.com/news/home/20170227006478/en/
Orthofix International N.V.
Mark Quick, 214-937-2924
markquick@orthofix.com
Source: Orthofix International N.V.
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