Orthofix International N.V. (Orthofix) has reported net sales of $519.7 million for the the full year of 2008, up 6%, compared with the net sales of $490.3 million in the previous year-end. It has also reported net loss of $228.6 million, or $13.37 per share, for the full year of 2008, compared with the net income of $10.9 million or $0.66 per share, in the previous year-end.
Total revenue for the three months ended December 31, 2008 increased 3% over the fourth quarter of 2007, to $132.3 million. Excluding the unfavorable $4.1 million impact of foreign currency rates on fourth quarter sales, revenue increased 6% on a constant currency basis.
“We were encouraged with the sequential improvement in the operating performance of our spinal implant and biologic business during the fourth quarter. This improved performance included increased revenue, a higher gross profit margin and lower adjusted operating expenses as a percentage of revenue compared with the third quarter, as a result of recent investments and initiatives in this business unit,” said President and CEO Alan Milinazzo. “With 74% of our total revenue for 2008 up an average of 15%, we also continued to be pleased with the fourth quarter results of our other core businesses, which performed well throughout the year.”
For the three months ended December 31, 2008, company reported net loss totaled $717,000, or $0.04 per share. Excluding certain items summarized in the table below, fourth quarter adjusted net income amounted to $6.8 million, or $0.40 per share. This was a 77% increase compared with adjusted net income of $3.8 million, or $0.23 per share, in the fourth quarter of 2007.
Excluding certain items, including a $237.7 million non-cash impairment charge, among other items, adjusted net income was $27.0 million, or $1.57 per share for the full year. A reconciliation of full year adjusted net income is included in the Regulation G Supplemental Information Schedule attached to this release.
Additionally, adjusted net income, excluding specified non-cash items was $9.5 million, or $0.56 per share in the fourth quarter, as indicated in the table below, and $43.5 million, or $2.54 per share for the full year, as indicated in the Regulation G Supplemental Information Schedule attached to this release.
Outlook
In 2009 Orthofix projects to generate between $535 and $545 million of revenue, and expects reported earnings to be $1.38-$1.48 per share. This earnings estimate includes pretax costs of about $5.8 million, or $0.21 per share, associated with strategic initiatives, and $3.3 million, or $0.12 per share, related to the previously announced reorganization and consolidation of Blackstone Medical’s operations.
The company also provided the following additional full-year 2009 Outlook:
Gross profit margin of 74%-75%,
Operating profit margin of 11%-12%,
Depreciation/amortization expense of $22-$24 million, including about $8 million of depreciation recorded in cost of sales
Consolidated EBITDA of $93-$98 million, as defined in the company’s amended credit facility previously filed with SEC interest expense of $26-$27 million,
Stock compensation expense of $5.5-$6.0 million,
A tax rate of 33%-35%, and
Average fully diluted shares outstanding of about 17.4 million.
The company also expects Blackstone Medical to achieve a quarterly operating profit in the fourth quarter of 2009. The improvement in Blackstone’s operating performance during 2009 is expected to result primarily from:
full year revenue growth of 8%-12% as a result of new product introductions, including the Firebird(TM) pedicle screw system and Trinity(R) Evolution(TM), among others;
improvement in the gross profit margin to 72%-73% in Q409, resulting from a significantly higher margin in its biologic portfolio due to Trinity Evolution combined with an increase in the portion of total revenues generated from higher margin spinal implants; and
a reduction in SG&A expenses as a percentage of revenue to about 59%-60% in Q409, as a result of both operating leverage achieved from the expected growth in revenue and the favorable impact of the previously announced reorganization and consolidation at Blackstone expected to be realized in the second half of 2009.