Tornier Reports First Quarter 2013 Results

Tornier Reports First Quarter 2013 Results

  • Reiterates Revenue and Non-GAAP Adjusted EBITDA Outlook for 2013
  • Non-GAAP Adjusted Gross Margin Expands 200 Basis Points Year over Year, Excluding Acquisition Related Costs

AMSTERDAM--(BUSINESS WIRE)-- Tornier N.V. (NAS: TRNX) , a global medical device company focused on providing surgical solutions to orthopaedic extremity specialists, reported today its financial results for the first quarter ended March 31, 2013.

Revenue for the first quarter of 2013 reached $82.7 million compared to first quarter 2012 revenue of $74.5 million, an increase of 11.0% as reported and 10.9% in constant currency. Revenue for the first quarter of 2013 included $8.4 million of revenue from the acquisition of OrthoHelix Surgical Designs, Inc., which closed October 4, 2012.


First quarter 2013 revenue of Tornier's extremities product categories totaled $67.3 million compared to $58.2 million during the prior year period, representing growth of 15.7% both as reported and in constant currency.

Giving pro forma effect to the OrthoHelix acquisition to include OrthoHelix revenue in the prior year period, Tornier's 2013 first quarter constant currency revenue growth was 1.7%, and Tornier's first quarter extremities product constant currency revenue increased 3.6%.

Dave Mowry, President and Chief Executive Officer of Tornier, commented, "Our revenue growth during the first quarter was driven by our Ascend shoulder family and strong lower extremities contributions from OrthoHelix. We are pleased with a solid start to the fiscal year, which positions us well for returning to double-digit, constant currency revenue growth on a pro forma basis during the second half of 2013."

The Company's first quarter 2013 adjusted EBITDA, as defined in the GAAP to non-GAAP reconciliation provided later in this release, was $9.1 million, or 11.0% of reported revenue, compared to $10.2 million, or 13.7% of revenue, in the same quarter of the prior year, a decrease of 10.2%.

Mr. Mowry added, "We continued to benefit from the OrthoHelix acquisition, favorable product mix and improved manufacturing efficiencies, and as a result, our non-GAAP adjusted gross margins expanded 200 basis points to 73.6%, compared to the same quarter last year. Looking to the remainder of the year, we believe that our focus on U.S. sales channel initiatives, international sales strategies, OrthoHelix revenue expansion, and key new product launches will enable us to accomplish our financial goals and to increase value for our shareholders."

First Quarter 2013 Revenue Highlights

Extremities

  • Revenue from the upper extremity joints and trauma category was $48.1 million, an increase of 2.3% in constant currency over the same quarter in 2012. This growth was primarily led by the Company's shoulder arthroplasty portfolio, including the Aequalis™ Reversed Shoulder and Aequalis™ Ascend™, which includes contribution from the limited launch of the Ascend Flex that began late in the fourth quarter of 2012.
  • Revenue from Tornier's lower extremity joints and trauma category in the first quarter of 2013 reached $15.1 million, an increase of 114.5% in constant currency. Giving pro forma effect to the OrthoHelix acquisition to include OrthoHelix revenue in the first quarter 2012, first quarter 2013 lower extremity revenue recorded constant currency growth of 11.4%. Pro forma growth was led by OrthoHelix products, particularly the new IFS Hammer Toe product line for toe deformities, and Tornier's Salto Tolaris total ankle.
  • Revenue from the sports medicine and biologics product category was $4.1 million, a decrease of 0.6% in constant currency over the same quarter in 2012 as strong growth in the Company's suture and BioFiber products was more than offset by decreases in our Conexa product and certain of our anchor product lines.

Large Joints

Revenue of the Company's large joints and other product lines was $15.4 million, a decrease of 6.0% over the same quarter in 2012 on a constant currency basis. In the first quarter, this product category decreased to 18.6% of the Company's reported global revenue compared to 21.9% during the prior year period.

Geographic Revenue

On a geographic basis as compared to the first quarter of 2012, Tornier's international revenue decreased 0.2% as reported and decreased 0.5% in constant currency, representing 42% of reported global revenue. Revenue in the United States increased by 20.9% and represented 58% of reported global revenue.

Second Quarter 2013 Outlook

  • For the second quarter of 2013, the Company projects constant currency revenue to be in the range of $76.0 to $79.0 million, inclusive of anticipated OrthoHelix revenue of $7.4 to $8.4 million, representing constant currency growth of 15.1% to 19.7% over second quarter 2012 revenue.
  • Based on recent currency exchange rates, second quarter 2013 reported revenue is projected to be in the range of $76.2 to $79.2 million, inclusive of anticipated OrthoHelix revenue, representing reported growth of 15.5% to 20.0% over second quarter 2012 revenue.
  • Second quarter 2013 extremities product categories revenue, inclusive of anticipated OrthoHelix revenue, is expected to grow 19.7% to 24.4% in constant currency.
  • The Company projects adjusted EBITDA, as described in the GAAP to non-GAAP reconciliation provided later in this release, inclusive of OrthoHelix operations, for the second quarter of 2013 to be in the range of $5.3 to $6.6 million, or 7.0% to 8.3% of reported revenue.

Fiscal Year 2013 Outlook

  • The Company is reiterating its previous revenue guidance of 2013 constant currency revenue in the range of $310.0 to $322.0 million, inclusive of anticipated OrthoHelix revenue, representing constant currency growth of 11.7% to 16.0%.
  • Based on recent currency exchange rates, 2013 reported revenue is projected to be in the range of $311.0 to $323.0 million, inclusive of anticipated OrthoHelix revenue, representing reported growth of 12.0% to 16.4% over 2012 revenue.
  • Revenue of the Tornier extremities product categories in 2013, inclusive of anticipated OrthoHelix revenue, is expected to grow 15.5% to 20.2% in constant currency.
  • The Company is also reiterating projected 2013 adjusted EBITDA in the range of $33.0 to $38.0 million, or 10.6% to 11.8% of reported revenue. OrthoHelix is expected to have a slight positive impact on 2013 adjusted EBITDA.

Conference Call

Tornier will host a conference call today at 4:30 p.m. eastern time to discuss its first quarter 2013 financial results and its outlook for 2013. The conference call will be available to interested parties through a live audio webcast available through the Company's website at www.tornier.com. Those without internet access may join the call from within the U.S. by dialing 1-877-673-5355; outside the U.S., dial +1-760-666-3805.

A telephone replay will be available for two weeks following the call by dialing (855) 859-2056 for domestic participants and (404) 537-3406 for international participants. When prompted, please enter the replay pin number 30404284. For those who are not available to listen to the live webcast, the call will be archived for one year on Tornier's website.

Forward-Looking Statements

Statements contained in this release that relate to future, not past, events are forward-looking statements under the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on current expectations of future events and often can be identified by words such as "expect," "should," "project," "anticipate," "intend," "will," "may," "believe," "could," "would," "continue," "outlook," "guidance," "future," "prospects," other words of similar meaning or the use of future dates. Examples of forward-looking statements in this release include Tornier's financial guidance for the second quarter of 2013 and for the full year 2013, Tornier's financial goal to return to double-digit constant currency revenue growth on a pro forma basis and Tornier's focus on U.S. sales channel initiatives, international sales strategies, OrthoHelix revenue expansion and key new product launches. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Uncertainties and risks may cause Tornier's actual results to be materially different than those expressed in or implied by Tornier's forward-looking statements. For Tornier, such uncertainties and risks include, among others, Tornier's future operating results and financial performance, fluctuations in foreign currency exchange rates, the effect of global economic conditions, the European sovereign debt crisis and austerity measures, risks associated with Tornier's international operations and expansion, risks associated with Tornier's recent acquisition of OrthoHelix and subsequent integration activities, changes in Tornier's arrangements with its distributors and independent sales agencies and transition to direct selling models in certain geographies and territories, the timing of regulatory approvals and introduction of new products, physician acceptance, endorsement, and use of new products; the effect of regulatory actions, changes in and adoption of reimbursement rates, potential product recalls, competitor activities, Tornier's leverage and access to credit under its credit agreement, and the costs and effects of litigation and changes in tax and other legislation. More detailed information on these and other factors that could affect Tornier's actual results are described in Tornier's filings with the U.S. Securities and Exchange Commission, including its most recent annual report on Form 10-K. Tornier undertakes no obligation to update its forward-looking statements.

About Tornier

Tornier is a global medical device company focused on serving extremities specialists who treat orthopaedic conditions of the shoulder, elbow, wrist, hand, ankle and foot. The Company's broad offering of over 100 product lines includes joint replacement, trauma, sports medicine, and biologic products to treat the extremities, as well as joint replacement products for the hip and knee in certain international markets. Since its founding approximately 70 years ago, Tornier's "Specialists Serving Specialists" philosophy has fostered a tradition of innovation, intense focus on surgeon education, and commitment to advancement of orthopaedic technology stemming from its close collaboration with orthopaedic surgeons and thought leaders throughout the world. For more information regarding Tornier, visit www.tornier.com.

Use of Non-GAAP Financial Measures

To supplement Tornier's consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP), Tornier uses certain non-GAAP financial measures in this release. Reconciliations of the non-GAAP financial measures used in this release to the most comparable U.S. GAAP measures for the respective periods can be found in tables later in this release immediately following the detail of revenue by geography. Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for Tornier's financial results prepared in accordance with GAAP.

Tornier N.V.
Consolidated Statements of Operations
(in thousands, except per share data)
   
Three months ended
(unaudited)
March 31, 2013 April 1, 2012
Revenue $ 82,685 $ 74,458
Cost of goods sold 21,869 21,116
Cost of goods sold - acquisition related   1,755     -  
Gross profit 59,061 53,342
71.4 % 71.6 %
Operating expenses
Selling, general and administrative 52,136 43,838
Research and development 6,182 5,623
Amortization of intangible assets 3,837 2,647
Special charges   1,519     -  
Total operating expenses 63,674 52,108
 
Operating (loss) income (4,613 ) 1,234
 
Other income (expense)
Interest income 39 113
Interest expense (2,218 ) (487 )
Foreign currency transaction (loss) gain (81 ) 25
Other non-operating income   17     1  
 
(Loss) income before income taxes (6,856 ) 886
Income tax expense   (42 )   (1,062 )
 
Consolidated net loss $ (6,898 ) $ (176 )
 
Net loss per share
Basic and diluted $ (0.17 ) $ (0.00 )
 
Weighted average ordinary shares outstanding
Basic and diluted 41,754 39,327
 
Tornier N.V.
Condensed Consolidated Balance Sheets
(in thousands)
   
March 31, 2013 December 30, 2012
(unaudited)
Assets
Current assets
Cash and cash equivalents $ 35,845 $ 31,108
Accounts receivable, net 55,179 54,192
Inventories 84,397 86,697
Deferred income taxes and other current assets   26,515   25,321
Total current assets 201,936 197,318
 
Instruments, net 52,575 51,394
Property, plant and equipment, net 36,352 37,151
Goodwill and intangibles, net 359,816 366,398
Deferred income taxes and other assets   570   1,966
Total assets $ 651,249 $ 654,227
 
Liabilities and shareholders' equity
Current liabilities
Short-term borrowing and current portion of long-term debt $ 4,337 $ 4,595
Accounts payable 15,297 11,526
Accrued liabilities, deferred income taxes and other current liabilities   56,394   44,505
Total current liabilities 76,028 60,626
 
Other long-term debt 113,361 115,457
Deferred income taxes and other long-term liabilities   34,581   42,065
Total liabilities 223,970 218,148
 
Shareholders' equity 427,279 436,079
   
Total liabilities and shareholders' equity $ 651,249 $ 654,227
 
Tornier N.V.
Consolidated Statements of Cash Flow
(in thousands)
   
Three months ended
(unaudited)
 
March 31, 2013 April 1, 2012
Cash flows from operating activities
Consolidated net loss $ (6,898 ) $ (176 )
 
Adjustments to reconcile consolidated net loss to net cash provided by (used in) operating activities
Depreciation and amortization 8,831 6,987
Non-cash foreign currency (gain) loss 81 (243 )
Deferred income taxes 1,212 (699 )
Share-based compensation 1,633 1,944
Non-cash interest expense and discount amortization 289 -
Inventory obsolescence 2,360 1,490
Inventory step up from acquisition 1,755 -
Other non-cash items affecting earnings 1,218 556
 
Changes in operating assets and liabilities
Accounts receivable (1,611 ) (4,774 )
Inventories (1,148 ) 373
Accounts payable and accruals 8,797 4,685
Other current assets and liabilities (1,202 ) (880 )
Other non-current assets and liabilities   1,101     (424 )
Net cash provided by (used in) operating activities 16,418 8,839
 
Cash flows from investing activities
Acquisition-related cash payments (3,032 ) (350 )
Additions of instruments (4,879 ) (3,922 )
Purchases of property, plant and equipment   (2,829 )   (1,156 )
Net cash (used in) investing activities (10,740 ) (5,428 )
 
Cash flows from financing activities
Change in short-term debt - 2,991
Repayments of long-term debt (2,379 ) (2,042 )
Proceeds from issuance of long-term debt - 5,343
Deferred financing costs (52 ) -
Issuance of ordinary shares   2,642     3,120  
Net cash provided by financing activities 211 9,412
 
Effect of currency exchange rates on cash and cash equivalents   (1,152 )   1,538  
 
Increase in cash and cash equivalents 4,737 14,361
 
Cash and cash equivalents at beginning of period   31,108     54,706  
 
Cash and cash equivalents at end of period $ 35,845   $ 69,067  
 
Tornier N.V.
Selected Revenue Information
(in thousands)
     
Three Months Ended
(unaudited)  
Percent
March 31, 2013 April 1, 2012 change
Revenue by product category
Upper extremity joints and trauma $ 48,117 $ 47,018 2.3 %
Lower extremity joints and trauma 15,073 7,029 114.4 %
Sports medicine and biologics   4,111   4,131 -0.5 %
Total extremities 67,301 58,178 15.7 %
Large joints and other   15,384   16,280 -5.5 %
Total $ 82,685 $ 74,458 11.0 %
 
Revenue by geography
United States $ 47,988 $ 39,701 20.9 %
International   34,697   34,757 -0.2 %
Total $ 82,685 $ 74,458 11.0 %

Increase your money and finance knowledge from home

Investing in Real Estate

Learn the basics of investing in real estate.

View Course »

Asset Allocation

Learn the most important step in structuring an investment portfolio.

View Course »

Add a Comment

*0 / 3000 Character Maximum
TWX -0.58 86.78

Related Tweets

  • DeJesusMorrobel RT @daily_finance: Coke's sales miss estimates as Diet Coke flags http://t.co/mXlcfAjSng $KO Retweet
  • C2FinancialCorp Pace of Existing Home Sales Rises to 8-Month High http://t.co/YqTiLWTVLc via @daily_finance #existinghomesales Retweet
  • pas5974 RT @daily_finance: Coke's sales miss estimates as Diet Coke flags http://t.co/mXlcfAjSng $KO Retweet
  • JeromeCleary 50 Million Reasons Why Netflix is Winning http://t.co/vwz4gV7vCM via @daily_finance $NFLX $AMZN Retweet
  • tombonfield11 RT @NicoleLapin: According to .@daily_finance: 'The Secret 770 Account: What It Is, Why You Should Have One' --> http://t.co/bSepvrBmj9 Retweet
More Tweets

Investing Calculators

Set investment goals