CONMED Corporation (CONMED) has reported net sales of $742.2 million for the full year of 2008, up 6.9%, compared with the net sales of $694.2 million in the previous year-end. It has also reported net income of $44.5 million, or $1.52 per diluted share, for the full year of 2008, compared with the net income of $41.5 million, or $1.43 per diluted share, in the previous year-end.
For the fourth quarter ended December 31, 2008, sales were $179.2 million against $189.6 million in the same quarter of 2007. GAAP diluted earnings per share were $0.36 against $0.41 in the fourth quarter of 2007. Non-GAAP diluted earnings per share equaled $0.34 against non-GAAP diluted earnings per share of $0.44 in the 2007 fourth quarter.
Sales for the year-ended December 31, 2008 were $742.2 million, up 6.9% against 2007. GAAP diluted earnings per share in 2008 grew to $1.52 against $1.43 in the prior year. On a non-GAAP basis, diluted earnings per share were $1.54, a 12.4% increase against $1.37 in 2007.
“As we discussed in our January 5, 2009 press release, CONMED’s financial results in the fourth quarter of 2008 were adversely impacted by exceptionally rapid changes in foreign currency exchange rates and cash conservation measures of hospital customers that led to reduced sales of the about’s capital equipment products. We are encouraged by the fourth quarter’s 8.4% constant currency growth of our single-use surgical and patient care products, a rate of growth in excess of the full year’s constant currency growth for these products. Historically, about 75% of the about’s sales are derived from the sale of single-use medical devices,” commented Joseph J. Corasanti, president and chief executive officer.
International sales in the fourth quarter of 2008 were $77.0 million against $82.4 million in the fourth quarter of 2007. Unfavorable fourth quarter currency exchange rates caused sales to be reduced by $10.7 million against exchange rates in the fourth quarter of 2007. On a constant currency basis, international sales experienced growth of 6.4% in the fourth quarter. Sales outside the United States for the full year of 2008 were $328.8 million, growing 13.4% overall. Approximately $2.0 million of the increase in sales for the full year was attributable to foreign currency exchange resulting in constant currency growth of 12.7% on international sales against 2007. For the 2008 year, international sales grew to 44.3% of the about’s total sales against 41.7% of sales in 2007.
CONMED’s liquidity and cash flow remain strong. During the fourth quarter of 2008, the about repurchased and retired $25 million face value of its 2.5% Convertible Notes at a discount of about 20%. The repurchase was funded by CONMED’s own cash resources. The transaction resulted in a pre-tax gain to the financial statements of about $4.4 million. Including the discount on the bond repurchase, the about reduced its debt during 2008 about $23.5 million. The about’s debt to total book capitalization ratio declined to 27.3% at December 31, 2008 against 30.6% at December 31, 2007. CONMED’s cash provided by operating activities was 41% greater than the about’s net income in 2008, evidencing the about’s favorable cash flow.
In January 2008, the about completed the purchase of the Italian distributor of CONMED’s products for a purchase price of about $21.8 million. In connection with the acquisition, in the first quarter of 2008, the about recorded a $1.0 million fair value adjustment to inventory acquired as a result of the acquisition; the inventory was subsequently sold in the first quarter of 2008.
Guidance
The company reiterate the guidance provided at that time and estimate 2009 sales of about $740 million and non-GAAP diluted earnings per share of $1.15 – $1.25. This forecast for 2009 assumes a constant currency growth rate of about 4%-5% over 2008 reported sales. However, at 2009 estimated foreign currency rates of exchange, the 30% of the about’s sales denominated in foreign currency would decline about 15% in U.S. dollars against average rates of exchange in 2008, thus off-setting the constant currency growth.
For the first quarter of 2009, the about estimates that sales will about $170 – $175 million, with non-GAAP diluted earnings per share of $0.23 – $0.28.
“While 2009 will be a challenging year for many organizations, including CONMED, we will remain focused on our goals to strengthen the about by completing the manufacturing restructuring plan and introducing new products to the market. We are well-positioned for long-term growth with a product offering that meets the needs of our hospital customers and with an experienced team of managers and staff,” noted Corasanti.