CONMED Corporation (CONMED) has provided fourth quarter and full year 2008 guidance. For the fourth quarter, company expects sales about $176 - $178 million. The company expects GAAP diluted earnings per share for the fourth quarter of 2008 will about $0.30 - $0.35. For the Full year 2008, company expects sales about $739 - $741 million, up 6.5% over 2007 sales. The company expects GAAP diluted earnings per share for the Full year 2008 will about $1.46 - $1.51.
“Usually, the company’s sales in the fourth quarter of each year experience a sequential increase from the seasonal effects of the third quarter’s summer months. This year, however, as a result of a rapid and dramatic 15% strengthening of the U.S. dollar adversely affecting foreign sales in the fourth quarter, and due to cash conservation measures among certain hospital customers causing a reduction from anticipated sales volumes for our capital equipment, the company’s fourth quarter sales will be lower than our previous estimates,” said Joseph J. Corasanti, president and CEO of CONMED.
During the first nine months of 2008, the company gradually increased its earnings guidance as a result of better than anticipated financial results in the first three quarters of the year partly due to the weakening of the US dollar and its positive effect on CONMED’s operations. However, the strengthening of the US dollar in the fourth quarter of 2008 has reversed the currency benefits derived earlier in the year.
The change in the economic climate during the last three months has been remarkably swift, with extreme volatility in foreign currency exchange rates and numerous reports of reduced capital spending and cash conservation throughout the healthcare provider industry. These changes in the overall economy have caused the company to reevaluate its outlook for 2009. CONMED’s revised forecast for 2009 assumes a constant currency growth rate of about 4%-5% over 2008 reported sales, compared to the company’s previous estimate of 6%. However, at current foreign currency rates of exchange, the 30% of the company’s sales denominated in foreign currency would decline about 15% compared to average rates of exchange in 2008. Thus, CONMED’s sales forecast for 2009 is about $740 million.
As a result of the reduced level of constant dollar sales, and since the profitability impact of the foreign currency exchange forecast is greater than that of the anticipated constant currency volume growth, the company expects reduced net income in 2009 compared to 2008. These expectations result in a non-GAAP earnings per share forecast of $1.15 – $1.25 for 2009, against $1.77 – $1.85 earlier estimated. GAAP earnings per share in 2009 is anticipated to be lower than the non-GAAP amounts as the company completes the previously disclosed manufacturing restructuring and incurs costs related thereto.
Corasanti added, “While CONMED has been adversely affected by the rapid economic changes, we remain committed to our long-term goals of increased profitability though the introduction of new products and increased efficiencies throughout the organization. Our products are well-regarded, we hold significant market share in our various product lines and our balance sheet is strong. Therefore, as the economy stabilizes, we believe we will be well-positioned to leverage the company’s strengths for the benefit of our customers and shareholders.”