Fourth Quarter 2017 Net Sales of $218
Million; Full-Year 2017 Net Sales of $745 Million
Wright Medical Group N.V. (NASDAQ:WMGI) today reported financial
results for its fourth quarter ended December 31, 2017 and
provided 2018 annual guidance. Unless otherwise noted, all
net sales growth rates in this release are stated on a constant
currency basis, which includes the benefit of the extra four
business selling days in the fourth quarter of fiscal year 2017.
Net sales from continuing operations totaled $217.6 million
during the fourth quarter ended December 31, 2017, representing
12.7% as reported and 11.2% constant currency growth, including the
benefit from the extra four business selling days, which the
company estimates to be approximately 4.5%. Gross margins
from continuing operations were 78.3% during the quarter ended
December 31, 2017 and were 78.8% on a non-GAAP adjusted
basis. Reconciliations of all historical non-GAAP financial
measures used in this release to the most comparable GAAP measures
can be found in the attached financial tables.
Robert Palmisano, president and chief executive officer,
commented, “As previously reported, our fourth quarter results
represent an outstanding performance in our U.S. upper extremities
business, which grew 29% including the benefit of the extra four
business selling days. This performance was driven by the
launch of our PERFORM Reversed glenoid and continued contribution
from our SIMPLICITI shoulder system. We anticipate that our
ongoing PERFORM Reversed launch and accelerating adoption of the
recently acquired BLUEPRINT enabling technology will continue to
drive strong shoulder sales growth in 2018.”
Palmisano further commented, “As anticipated, we did not see any
benefit in the fourth quarter in our U.S. lower extremities
business from the sales force expansion. Additionally, we had
some supply constraints primarily related to a third-party coating
vendor in the fourth quarter, which we believe have been
addressed. However, this affected our total ankle business
during the fourth quarter. As previously discussed, we will
continue to focus on improving our execution and building our
physician relationships to restore growth in our core U.S. lower
extremities business and expect to see improvement in 2018 as our
larger sales footprint, new products, new reps and expanding
relationships begin to take effect.”
Net income from continuing operations for the fourth quarter of
2017 totaled $26.9 million, or $0.25 per diluted share.
The company’s net income from continuing operations for the
fourth quarter of 2017 included a $16.0 million tax benefit related
to the realizability of net operating losses, a $9.8 million
benefit from incentive and indirect tax projects, an $8.3 million
tax benefit related to tax law reform in the U.S. and France, an
unrealized gain of $1.4 million related to mark-to-market
adjustments on contingent value rights (CVRs) issued in connection
with the BioMimetic acquisition, an unrealized gain of $0.6 million
related to mark-to-market adjustments on derivatives, non-cash
interest expense of $11.7 million related to its convertible notes,
and $2.9 million of transaction and transition costs.
The company's fourth quarter 2017 non-GAAP net income from
continuing operations, as adjusted for the above items, was $3.5
million. The company's fourth quarter 2017 non-GAAP adjusted
EBITDA from continuing operations, as defined in the non-GAAP to
GAAP reconciliation provided later in this release, was $38.0
million. The attached financial tables include reconciliations of
all historical non-GAAP measures to the most comparable GAAP
measures.
Cash and cash equivalents totaled $167.7 million as of the end
of the fourth quarter of 2017. None of the cash was
considered restricted at the end of fourth quarter of
2017.
Palmisano concluded, “I believe we are positioned well for
future success in both our upper and lower extremities
businesses. We have focused sales organizations, highly
differentiated products and robust future product development
pipelines. Our 2018 guidance assumes improving underlying
constant currency growth, driven by successfully executing our new
product launches, including the PERFORM Reversed glenoid and
minimally-invasive lower extremity procedure instruments, and
improving the productivity of the U.S. lower extremities sales
force. I believe that we are set up well for double-digit net
sales growth and significant margin expansion in 2018 and
beyond.”
Outlook
The company anticipates net sales for full-year 2018 of
approximately $800 million to $812 million. This guidance
range has approximately 1% cushion from foreign currency exchange
rates as compared to current rates. In addition, this range
implies full-year 2018 constant currency net sales growth of 9% to
11%, excluding the estimated $9 million impact of the four fewer
selling days in fourth quarter of 2018.
The company anticipates full-year 2018 non-GAAP adjusted EBITDA
from continuing operations, as described in the non-GAAP
reconciliation provided later in this release, to be in the range
of $104 million to $111 million.
The company expects its non-GAAP adjusted earnings per share
from continuing operations, including share-based compensation, as
described in the non-GAAP to GAAP reconciliation provided later in
this release, for full-year 2018 to be a loss of $0.16 to $0.23 per
diluted share.
The company estimates approximately 106.9 million diluted
weighted average ordinary shares outstanding for fiscal year
2018.
The company's non-GAAP adjusted EBITDA from continuing
operations target is measured by adding back to net loss from
continuing operations charges for interest, income taxes,
depreciation and amortization expenses, non-cash share-based
compensation expense and non-operating income and expense.
Additionally, the company’s adjusted EBITDA from continuing
operations target excludes possible future acquisitions; other
material future business developments; and due diligence,
transaction and transition costs associated with acquisitions and
divestitures.
The company’s non-GAAP adjusted earnings per share from
continuing operations target is measured by adding back to net loss
from continuing operations non-cash interest expense associated
with the convertible notes; due diligence, transaction and
transition costs associated with acquisitions and divestitures;
mark-to-market adjustments to CVRs; non-cash mark-to-market
derivative adjustments; and charges for non-cash amortization
expenses, net of taxes. Note that as a result of the company’s
relatively low effective tax rate due to the valuation allowance
impacting a substantial portion of the company’s income/loss, the
company is currently estimating the tax effect on amortization
expense at 0%. Further, this adjusted earnings per share from
continuing operations target excludes possible future acquisitions;
other material future business developments; and gains and losses
related to currency fluctuations on our intercompany receivable and
payable balances that are denominated in foreign currencies.
All of the historical non-GAAP financial measures used in this
release are reconciled to the most directly comparable GAAP
measures. With respect to the company’s 2018 financial guidance
regarding non-GAAP adjusted EBITDA from continuing operations and
non-GAAP adjusted earnings per share from continuing operations,
however, the company cannot provide a quantitative reconciliation
to the most directly comparable GAAP measures without unreasonable
effort due to its inability to make accurate projections and
estimates related to certain information needed to calculate some
of the adjustments as described above, including the foreign
currency fluctuations and market driven fair value adjustments to
CVRs and derivatives. The anticipated differences between these
non-GAAP financial measures and the most directly comparable GAAP
measure are described above qualitatively.
The company's anticipated ranges for net sales from continuing
operations, non-GAAP adjusted EBITDA from continuing operations,
and non-GAAP adjusted earnings per share from continuing operations
are forward-looking statements, as are any other statements that
anticipate or aspire to future events or performance. They
are subject to various risks and uncertainties that could cause the
company's actual results to differ materially from the anticipated
targets. The anticipated targets are not predictions of the
company's actual performance. See the cautionary information
about forward-looking statements in the “Cautionary Note Regarding
Forward-Looking Statements” section of this release.
Supplemental Financial Information
To view the fourth quarter of 2017 supplemental financial
information, visit ir.wright.com. For historical information
on Wright Medical Group N.V. segment reporting changes and non-GAAP
combined pro forma financial information, please refer to the
presentation posted on Wright’s website at ir.wright.com in the
“Financial Information” section.
Internet Posting of Information
Wright routinely posts information that may be important to
investors in the “Investor Relations” section of its website at
www.wright.com. The company encourages investors and
potential investors to consult the Wright website regularly for
important information about Wright.
Conference Call and Webcast
As previously announced, Wright will host a conference call
starting at 3:30 p.m. Central Time today. The live dial-in
number for the call is (844) 295-9436 (U.S.) / (574) 990-1040
(Outside U.S.). The participant passcode for the call is
“Wright.” A simultaneous webcast of the call will be
available via Wright’s corporate website at
www.wright.com.
A replay of the call will be available beginning at 5:30 p.m.
Central Time on February 27, 2018 through March 6, 2018. To
hear this replay, dial (855) 859-2056 (U.S.) / (404) 537-3406
(Outside U.S.) and enter code 94803367. A replay of the
conference call will also be available via the internet starting
today and continuing for at least 12 months. To access a
replay of the conference call via the internet, go to the “Investor
Relations - Presentations/Calendar” section of the company’s
corporate website located at www.wright.com.
The conference call may include a discussion of non-GAAP
financial measures. Reference is made to the most directly
comparable GAAP financial measures, the reconciliation of the
differences between the two financial measures, and the other
information included in this release, the Current Report on Form
8-K filed with the U.S. Securities and Exchange Commission (SEC)
today, or otherwise available in the “Investor Relations -
Supplemental Financial Information” section of the company's
corporate website located at www.wright.com.
The conference call may include forward-looking
statements. See the cautionary information about
forward-looking statements in the “Cautionary Note Regarding
Forward-Looking Statements” section of this release.
About Wright Medical Group N.V.
Wright Medical Group N.V. is a global medical device company
focused on extremities and biologics products. The company is
committed to delivering innovative, value-added solutions improving
the quality of life for patients worldwide. Wright is a
recognized leader of surgical solutions for the upper extremities
(shoulder, elbow, wrist and hand), lower extremities (foot and
ankle) and biologics markets, three of the fastest growing segments
in orthopaedics. For more information about Wright, visit
www.wright.com.
™ and ® denote trademarks and registered trademarks of Wright
Medical Group N.V. or its affiliates, registered as indicated
in the United States, and in other countries. All other
trademarks and trade names referred to in this release are the
property of their respective owners.
Non-GAAP Financial Measures
To supplement the company’s consolidated financial statements
prepared in accordance with U.S. generally accepted accounting
principles, the company uses certain non-GAAP financial measures in
this release. Reconciliations of the historical non-GAAP financial
measures used in this release to the most comparable GAAP measures
for the respective periods can be found in tables later in this
release. Wright’s non-GAAP financial measures include net sales,
excluding the impact of foreign currency; net income, as adjusted;
EBITDA, as adjusted; gross margin, as adjusted; earnings, as
adjusted; and earnings, as adjusted, per diluted share, in each
case, from continuing operations. The company's management believes
that the presentation of these measures provides useful information
to investors. These measures may assist investors in
evaluating the company's operations, period over period. Wright’s
non-GAAP financial measures exclude such items as tax impacts from
changes in the realizability of net operating losses, impacts from
incentive and indirect tax projects, impacts from tax law reform,
non-cash interest expense related to the company's convertible
notes, transaction and transition costs, net gains and losses on
mark-to-market adjustments on CVRs and derivative assets and
liabilities, all of which may be highly variable, difficult to
predict and of a size that could have substantial impact on the
company's reported results of operations for a period. It is
for this reason that the company cannot provide without
unreasonable effort a quantitative reconciliation to the most
directly comparable GAAP measures for its 2018 financial guidance
regarding non-GAAP adjusted EBITDA from continuing operations and
non-GAAP adjusted earnings per share from continuing operations.
Management uses the non-GAAP measures in this release internally
for evaluation of the performance of the business, including the
allocation of resources and the evaluation of results relative to
employee performance compensation targets. Investors should
consider non-GAAP financial measures only as a supplement to, not
as a substitute for or as superior to, measures of financial
performance prepared in accordance with GAAP.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This release includes forward-looking statements under the
Private Securities Litigation Reform Act of 1995. These
forward-looking statements generally can be identified by the use
of words such as “anticipate,” “expect,” “could,” “may,” “will,”
“believe,” “estimate,” “continue,” “guidance,” “future,” other
words of similar meaning and the use of future dates.
Forward-looking statements in this release include, but are not
limited to, statements about the company’s anticipated financial
results for 2018, including net sales from continuing operations,
adjusted EBITDA from continuing operations and adjusted earnings
per share from continuing operations, anticipated strong shoulder
sales growth in 2018 and anticipated improvement in 2018 as its
larger sales footprint, new products, new reps and expanding
relationships begin to take effect. Forward-looking statements by
their nature address matters that are, to different degrees,
uncertain. Each forward-looking statement contained in this release
is subject to risks and uncertainties that could cause actual
results to differ materially from those expressed or implied by
such statement. Applicable risks and uncertainties include, among
others, the failure of the company’s recent U.S. sales force
additions, focus on core product portfolio and incentives to drive
U.S. lower extremities and biologics sales or delay in realization
thereof; the risk of continued supply constraints; the failure to
integrate the legacy Wright and Tornier businesses and realize net
sales synergies and cost savings from the merger with Tornier or
delay in realization thereof; operating costs and business
disruption as a result of the merger, including adverse effects on
employee retention and sales force productivity and on business
relationships with third parties; integration costs; actual or
contingent liabilities; adverse effects of diverting resources and
attention to providing transition services to the purchaser of the
large joints business; the adequacy of the company’s capital
resources and need for additional financing; the timing of
regulatory approvals and introduction of new products; physician
acceptance, endorsement, and use of new products; failure to
achieve the anticipated commercial sales of our AUGMENT® Bone Graft
products; the effect of regulatory actions, changes in and adoption
of reimbursement rates; product liability claims and product
recalls; pending and threatened litigation; risks associated with
the metal-on-metal master settlement agreement and the settlement
agreement with the three settling insurers; risks associated with
the subsequent metal-on-metal settlement agreements and ability to
obtain the additional new insurance proceeds contingent thereon;
risks associated with international operations and expansion;
fluctuations in foreign currency exchange rates; other business
effects, including the effects of industry, economic or political
conditions outside of the company’s control; reliance on
independent distributors and sales agencies; competitor activities;
changes in tax and other legislation; and the risks identified
under the heading “Risk Factors” in Wright’s Annual Report on Form
10-K for the year ended December 25, 2016 filed by Wright with the
SEC on February 23, 2017, including its Quarterly Report on Form
10-Q for the quarter ended September 24, 2017 filed by Wright with
the SEC on November 2, 2017, Wright’s Annual Report on Form 10-K
for the year ended December 31, 2017 anticipated to be filed by
Wright with the SEC on February 27, 2018 and subsequent SEC filings
by Wright. Investors should not place considerable reliance on the
forward-looking statements contained in this release. Investors are
encouraged to read Wright’s filings with the SEC, available at
www.sec.gov, for a discussion of these and other risks and
uncertainties. The forward-looking statements in this release speak
only as of the date of this release, and Wright undertakes no
obligation to update or revise any of these statements. Wright’s
business is subject to substantial risks and uncertainties,
including those referenced above. Investors, potential investors,
and others should give careful consideration to these risks and
uncertainties.
--Tables Follow--
Wright Medical Group
N.V.Condensed Consolidated Statements of
Operations (dollars in thousands,
except per share data--unaudited) |
|
|
|
|
|
Three months ended |
|
Fiscal year ended |
|
December 31, 2017 |
|
December 25, 2016 |
|
December 31, 2017 |
|
December 25, 2016 |
Net sales |
$ |
217,602 |
|
|
$ |
193,023 |
|
|
$ |
744,989 |
|
|
$ |
690,362 |
|
Cost of sales |
47,278 |
|
|
50,583 |
|
|
160,947 |
|
|
192,407 |
|
Gross
profit |
170,324 |
|
|
142,440 |
|
|
584,042 |
|
|
497,955 |
|
Operating
expenses: |
|
|
|
|
|
|
|
Selling,
general and administrative |
133,149 |
|
|
140,489 |
|
|
525,222 |
|
|
541,558 |
|
Research
and development |
13,144 |
|
|
13,809 |
|
|
50,115 |
|
|
50,514 |
|
Amortization of intangible assets |
6,822 |
|
|
7,434 |
|
|
28,396 |
|
|
28,841 |
|
Total
operating expenses |
153,115 |
|
|
161,732 |
|
|
603,733 |
|
|
620,913 |
|
Operating
income (loss) |
17,209 |
|
|
(19,292 |
) |
|
(19,691 |
) |
|
(122,958 |
) |
Interest expense,
net |
19,132 |
|
|
16,857 |
|
|
74,644 |
|
|
58,530 |
|
Other (income) expense,
net |
(1,305 |
) |
|
346 |
|
|
5,570 |
|
|
(3,148 |
) |
Loss from
continuing operations before income taxes |
(618 |
) |
|
(36,495 |
) |
|
(99,905 |
) |
|
(178,340 |
) |
Benefit for income
taxes |
(27,470 |
) |
|
(6,493 |
) |
|
(34,968 |
) |
|
(13,406 |
) |
Net
income (loss) from continuing operations |
$ |
26,852 |
|
|
$ |
(30,002 |
) |
|
$ |
(64,937 |
) |
|
$ |
(164,934 |
) |
Income (loss) from
discontinued operations, net of tax |
2,281 |
|
|
$ |
(14,874 |
) |
|
$ |
(137,661 |
) |
|
$ |
(267,439 |
) |
Net
income (loss) |
$ |
29,133 |
|
|
$ |
(44,876 |
) |
|
$ |
(202,598 |
) |
|
$ |
(432,373 |
) |
|
|
|
|
|
|
|
|
Net income (loss) from
continuing operations per share, basic |
$ |
0.26 |
|
|
$ |
(0.29 |
) |
|
$ |
(0.62 |
) |
|
$ |
(1.60 |
) |
Net income (loss) from
continuing operations per share, diluted |
$ |
0.25 |
|
|
$ |
(0.29 |
) |
|
$ |
(0.62 |
) |
|
$ |
(1.60 |
) |
|
|
|
|
|
|
|
|
Net income (loss) per
share, basic |
$ |
0.28 |
|
|
$ |
(0.43 |
) |
|
$ |
(1.94 |
) |
|
$ |
(4.20 |
) |
Net income (loss) per
share, diluted |
$ |
0.27 |
|
|
$ |
(0.43 |
) |
|
$ |
(1.94 |
) |
|
$ |
(4.20 |
) |
|
|
|
|
|
|
|
|
Weighted-average number
of shares outstanding-basic |
105,195 |
|
|
103,309 |
|
|
104,531 |
|
|
102,968 |
|
Weighted-average number
of shares outstanding-diluted |
106,578 |
|
|
103,309 |
|
|
104,531 |
|
|
102,968 |
|
Wright Medical Group
N.V.Consolidated Net Sales
Analysis(dollars in thousands--unaudited) |
|
|
|
|
|
Three months ended |
|
Fiscal year ended |
|
December 31, 2017 |
|
December 25, 2016 |
|
%change |
|
December 31, 2017 |
|
December 25, 2016 |
|
%change |
U.S. |
|
|
|
|
|
|
|
|
|
|
|
Lower
extremities |
66,816 |
|
|
64,064 |
|
|
4.3 |
% |
|
228,044 |
|
|
222,936 |
|
|
2.3 |
% |
Upper
extremities |
71,685 |
|
|
55,462 |
|
|
29.3 |
% |
|
239,965 |
|
|
201,579 |
|
|
19.0 |
% |
Biologics |
21,814 |
|
|
21,436 |
|
|
1.8 |
% |
|
78,361 |
|
|
74,603 |
|
|
5.0 |
% |
Sports
med & other |
2,242 |
|
|
2,103 |
|
|
6.6 |
% |
|
8,141 |
|
|
8,429 |
|
|
(3.4 |
)% |
Total
U.S. |
$ |
162,557 |
|
|
$ |
143,065 |
|
|
13.6 |
% |
|
$ |
554,511 |
|
|
$ |
507,547 |
|
|
9.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
International |
|
|
|
|
|
|
|
|
|
|
|
Lower
extremities |
16,101 |
|
|
16,717 |
|
|
(3.7 |
)% |
|
58,473 |
|
|
62,701 |
|
|
(6.7 |
)% |
Upper
extremities |
28,093 |
|
|
24,261 |
|
|
15.8 |
% |
|
94,699 |
|
|
86,502 |
|
|
9.5 |
% |
Biologics |
6,784 |
|
|
5,079 |
|
|
33.6 |
% |
|
22,276 |
|
|
18,883 |
|
|
18.0 |
% |
Sports
med & other |
4,067 |
|
|
3,901 |
|
|
4.3 |
% |
|
15,030 |
|
|
14,729 |
|
|
2.0 |
% |
Total
International |
$ |
55,045 |
|
|
$ |
49,958 |
|
|
10.2 |
% |
|
$ |
190,478 |
|
|
$ |
182,815 |
|
|
4.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Global |
|
|
|
|
|
|
|
|
|
|
|
Lower
extremities |
82,917 |
|
|
80,781 |
|
|
2.6 |
% |
|
286,517 |
|
|
285,637 |
|
|
0.3 |
% |
Upper
extremities |
99,778 |
|
|
79,723 |
|
|
25.2 |
% |
|
334,664 |
|
|
288,081 |
|
|
16.2 |
% |
Biologics |
28,598 |
|
|
26,515 |
|
|
7.9 |
% |
|
100,637 |
|
|
93,486 |
|
|
7.6 |
% |
Sports
med & other |
6,309 |
|
|
6,004 |
|
|
5.1 |
% |
|
23,171 |
|
|
23,158 |
|
|
0.1 |
% |
Total
sales |
$ |
217,602 |
|
|
$ |
193,023 |
|
|
12.7 |
% |
|
$ |
744,989 |
|
|
$ |
690,362 |
|
|
7.9 |
% |
Wright Medical Group
N.V.Supplemental Net Sales
Information(unaudited) |
|
|
|
Three months ended December 31, 2017 net sales
growth/(decline) |
|
U.S. as reported |
Int'l constant currency |
Int'l as reported |
Global constant currency |
Global as reported |
Product line |
|
|
|
|
|
Lower
extremities |
4 |
% |
(9 |
%) |
(4 |
%) |
2 |
% |
3 |
% |
Upper
extremities |
29 |
% |
9 |
% |
16 |
% |
23 |
% |
25 |
% |
Biologics |
2 |
% |
30 |
% |
34 |
% |
7 |
% |
8 |
% |
Sports
med & other |
7 |
% |
(3 |
%) |
4 |
% |
0 |
% |
5 |
% |
Total net
sales |
14 |
% |
4 |
% |
10 |
% |
11 |
% |
13 |
% |
|
Fiscal year ended December 31, 2017 net sales
growth/(decline) |
|
U.S. as reported |
Int'l constant currency |
Int'l as reported |
Global constant currency |
Global as reported |
Product line |
|
|
|
|
|
Lower
extremities |
2 |
% |
(7 |
%) |
(7 |
%) |
0 |
% |
0 |
% |
Upper
extremities |
19 |
% |
8 |
% |
9 |
% |
16 |
% |
16 |
% |
Biologics |
5 |
% |
17 |
% |
18 |
% |
8 |
% |
8 |
% |
Sports
med & other |
(3 |
%) |
2 |
% |
2 |
% |
0 |
% |
0 |
% |
Total net
sales |
9 |
% |
4 |
% |
4 |
% |
8 |
% |
8 |
% |
Wright Medical Group
N.V.Reconciliation of Adjusted Non-GAAP Earnings
Per Share to Net Income (Loss) from Continuing Operations Per
Share (dollars in thousands, except
per share data--unaudited) |
|
|
|
|
|
Three months ended |
|
Fiscal year ended |
|
December 31, 2017 |
|
December 25, 2016 |
|
December 31, 2017 |
|
December 25, 2016 |
Net income
(loss) from continuing operations, as reported |
$ |
26,852 |
|
|
$ |
(30,002 |
) |
|
$ |
(64,937 |
) |
|
$ |
(164,934 |
) |
Net income
(loss) from continuing operations per share, as
reported |
0.25 |
|
|
(0.29 |
) |
|
(0.62 |
) |
|
(1.60 |
) |
Reconciling items: |
|
|
|
|
|
|
|
Inventory
step-up amortization |
— |
|
|
6,767 |
|
|
— |
|
|
37,689 |
|
Non-cash
interest expense on convertible notes 1 |
11,746 |
|
|
10,755 |
|
|
45,489 |
|
|
36,567 |
|
Non-cash
loss on extinguishment of debt |
— |
|
|
— |
|
|
— |
|
|
12,343 |
|
Derivatives mark-to-market adjustments 2 |
(634 |
) |
|
(1,813 |
) |
|
(4,797 |
) |
|
(28,273 |
) |
Transaction and transition costs |
2,915 |
|
|
8,422 |
|
|
12,400 |
|
|
36,374 |
|
Incentive
and indirect tax projects 3 |
(9,774 |
) |
|
— |
|
|
(9,774 |
) |
|
— |
|
Management changes |
— |
|
|
— |
|
|
— |
|
|
1,348 |
|
CVR
mark-to-market adjustments 2 |
(1,401 |
) |
|
(280 |
) |
|
5,320 |
|
|
8,688 |
|
Contingent consideration fair value adjustment 2 |
(228 |
) |
|
93 |
|
|
81 |
|
|
469 |
|
Legal
settlement |
— |
|
|
— |
|
|
— |
|
|
1,800 |
|
Costs
associated with 2021 Notes issuance |
— |
|
|
— |
|
|
— |
|
|
234 |
|
Tax law
reform 4 |
(8,255 |
) |
|
— |
|
|
(8,255 |
) |
|
— |
|
Tax
benefit related to realizability of net operating losses 4 |
(16,037 |
) |
|
— |
|
|
(24,965 |
) |
|
— |
|
IRS
settlement 5 |
— |
|
|
— |
|
|
— |
|
|
(3,073 |
) |
Tax
effect of reconciling items 6 |
(1,728 |
) |
|
(2,114 |
) |
|
(1,798 |
) |
|
(7,748 |
) |
Deferred
tax benefit from acquired operations |
— |
|
|
(5,598 |
) |
|
— |
|
|
(5,598 |
) |
Non-GAAP net
income (loss) from continuing operations, as adjusted |
$ |
3,456 |
|
|
$ |
(13,770 |
) |
|
$ |
(51,236 |
) |
|
$ |
(74,114 |
) |
Add back
amortization of intangible assets |
6,822 |
|
|
7,434 |
|
|
28,396 |
|
|
28,841 |
|
Adjusted
non-GAAP earnings |
$ |
10,278 |
|
|
$ |
(6,336 |
) |
|
$ |
(22,840 |
) |
|
$ |
(45,273 |
) |
Weighted-average diluted shares outstanding |
106,578 |
|
|
103,309 |
|
|
104,531 |
|
|
102,968 |
|
Adjusted
non-GAAP earnings per share |
$ |
0.10 |
|
|
$ |
(0.06 |
) |
|
$ |
(0.22 |
) |
|
$ |
(0.44 |
) |
_______________________________
1 Impacting interest expense, net.2 Impacting other
(income) expense, net.3 Incentive and indirect tax projects
include $0.6 million of other income and $0.2 million of interest
income.4 Impacting benefit from income taxes.5 IRS
settlement includes $0.8 million of interest income and $2.3
million tax benefit.6 Determined based upon the effective tax
rate in the jurisdiction in which the expense was incurred.
|
Wright Medical Group
N.V.Reconciliation of Non-GAAP Adjusted EBITDA to
Net Loss from Continuing
Operations (dollars in
thousands--unaudited) |
|
|
|
|
|
Three months ended |
|
Fiscal year ended |
|
December 31, 2017 |
|
December 25, 2016 |
|
December 31, 2017 |
|
December 25, 2016 |
Net income
(loss) from continuing operations |
$ |
26,852 |
|
|
$ |
(30,002 |
) |
|
$ |
(64,937 |
) |
|
$ |
(164,934 |
) |
Interest expense,
net |
19,132 |
|
|
16,857 |
|
|
74,644 |
|
|
58,530 |
|
Benefit for income
taxes |
(27,470 |
) |
|
(6,493 |
) |
|
(34,968 |
) |
|
(13,406 |
) |
Depreciation |
14,708 |
|
|
14,825 |
|
|
56,832 |
|
|
55,830 |
|
Amortization |
6,822 |
|
|
7,434 |
|
|
28,396 |
|
|
28,841 |
|
Non-GAAP
EBITDA |
$ |
40,044 |
|
|
$ |
2,621 |
|
|
$ |
59,967 |
|
|
$ |
(35,139 |
) |
Reconciling items
impacting EBITDA: |
|
|
|
|
|
|
|
Non-cash
share-based compensation expense |
5,262 |
|
|
4,515 |
|
|
19,393 |
|
|
14,416 |
|
Other
(income) expense, net |
(1,305 |
) |
|
346 |
|
|
5,570 |
|
|
(3,148 |
) |
Inventory
step-up amortization |
— |
|
|
6,767 |
|
|
— |
|
|
37,689 |
|
Transaction and transition costs |
2,915 |
|
|
8,422 |
|
|
12,400 |
|
|
36,374 |
|
Incentive
and indirect tax projects |
(8,965 |
) |
|
— |
|
|
(8,965 |
) |
|
— |
|
Management changes |
— |
|
|
— |
|
|
— |
|
|
1,348 |
|
Legal
settlement |
— |
|
|
— |
|
|
— |
|
|
1,800 |
|
Costs
associated with 2021 Notes issuance |
— |
|
|
— |
|
|
— |
|
|
234 |
|
Non-GAAP
adjusted EBITDA |
$ |
37,951 |
|
|
$ |
22,671 |
|
|
$ |
88,365 |
|
|
$ |
53,574 |
|
Net sales
from continuing operations |
217,602 |
|
|
193,023 |
|
|
744,989 |
|
|
690,362 |
|
Non-GAAP
adjusted EBITDA margin |
17.4 |
% |
|
11.7 |
% |
|
11.9 |
% |
|
7.8 |
% |
Wright Medical Group
N.V.Reconciliation of Non-GAAP Adjusted Gross
Margins to Gross Margins from Continuing
Operations (dollars in
thousands--unaudited) |
|
|
|
|
|
Three months ended |
|
Fiscal year ended |
|
December 31, 2017 |
|
December 25, 2016 |
|
December 31, 2017 |
|
December 25, 2016 |
Gross profit
from continuing operations, as reported |
$ |
170,324 |
|
|
$ |
142,440 |
|
|
$ |
584,042 |
|
|
$ |
497,955 |
|
Gross margins
from continuing operations, as reported |
78.3 |
% |
|
73.8 |
% |
|
78.4 |
% |
|
72.1 |
% |
Reconciling items
impacting gross profit: |
|
|
|
|
|
|
|
Inventory
step-up amortization |
— |
|
|
6,767 |
|
|
— |
|
|
37,689 |
|
Transaction and transition costs |
1,100 |
|
|
547 |
|
|
3,095 |
|
|
4,198 |
|
Non-GAAP gross
profit from continuing operations, as adjusted |
$ |
171,424 |
|
|
$ |
149,754 |
|
|
$ |
587,137 |
|
|
$ |
539,842 |
|
Net sales
from continuing operations |
217,602 |
|
|
193,023 |
|
|
744,989 |
|
|
690,362 |
|
Non-GAAP
adjusted gross margins from continuing operations |
78.8 |
% |
|
77.6 |
% |
|
78.8 |
% |
|
78.2 |
% |
Wright Medical Group
N.V.Reconciliation of Other Non-GAAP Financial
Measures to Other As Reported
Results (dollars in
thousands--unaudited) |
|
|
|
|
|
Three months ended |
|
Fiscal year ended |
|
December 31, 2017 |
|
December 25, 2016 |
|
December 31, 2017 |
|
December 25, 2016 |
Net
sales |
$ |
217,602 |
|
|
$ |
193,023 |
|
|
$ |
744,989 |
|
|
$ |
690,362 |
|
|
|
|
|
|
|
|
|
Selling,
general and administrative expense, as reported |
$ |
133,149 |
|
|
$ |
140,489 |
|
|
$ |
525,222 |
|
|
$ |
541,558 |
|
Selling, general and
administrative expense as a percentages of net sales, as
reported |
61.2 |
% |
|
72.8 |
% |
|
70.5 |
% |
|
78.4 |
% |
Reconciling items
impacting selling, general and administrative expense: |
|
|
|
|
|
|
|
Transaction and transition costs - selling, general and
administrative |
1,746 |
|
|
7,948 |
|
|
9,014 |
|
|
31,860 |
|
Incentive
and indirect tax projects |
(8,965 |
) |
|
— |
|
|
(8,965 |
) |
|
— |
|
Management changes |
— |
|
|
— |
|
|
— |
|
|
1,348 |
|
Legal
settlement |
— |
|
|
— |
|
|
— |
|
|
1,800 |
|
Costs
associated with 2021 Notes issuance |
— |
|
|
— |
|
|
— |
|
|
234 |
|
Selling,
general and administrative expense, as adjusted |
$ |
140,368 |
|
|
$ |
132,541 |
|
|
$ |
525,173 |
|
|
$ |
506,316 |
|
Selling,
general and administrative expense as a percentage of net sales, as
adjusted |
64.5 |
% |
|
68.7 |
% |
|
70.5 |
% |
|
73.3 |
% |
|
|
|
|
|
|
|
|
Research &
development expense, as reported |
$ |
13,144 |
|
|
$ |
13,809 |
|
|
$ |
50,115 |
|
|
$ |
50,514 |
|
Research &
development expense as a percentages of net sales, as reported |
6.0 |
% |
|
7.2 |
% |
|
6.7 |
% |
|
7.3 |
% |
Reconciling items
impacting research & development expense: |
|
|
|
|
|
|
|
Transaction and transition costs - research & development |
69 |
|
|
(73 |
) |
|
291 |
|
|
316 |
|
Research &
development expense, as adjusted |
$ |
13,075 |
|
|
$ |
13,882 |
|
|
$ |
49,824 |
|
|
$ |
50,198 |
|
Research &
development expense as a percentage of net sales, as
adjusted |
6.0 |
% |
|
7.2 |
% |
|
6.7 |
% |
|
7.3 |
% |
Wright Medical Group
N.V.Condensed Consolidated Balance
Sheets(dollars in thousands--unaudited) |
|
|
December 31, 2017 |
|
December 25, 2016 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
$ |
167,740 |
|
|
$ |
262,265 |
|
Restricted cash |
— |
|
|
150,000 |
|
Accounts
receivable, net |
130,610 |
|
|
130,602 |
|
Inventories |
168,144 |
|
|
150,849 |
|
Prepaid
expenses and other current assets |
100,400 |
|
|
65,909 |
|
Total
current assets |
566,894 |
|
|
759,625 |
|
|
|
|
|
Property, plant and
equipment, net |
212,379 |
|
|
201,732 |
|
Goodwill and intangible
assets, net |
1,164,663 |
|
|
1,082,839 |
|
Other assets |
184,788 |
|
|
246,390 |
|
Total
assets |
$ |
2,128,724 |
|
|
$ |
2,290,586 |
|
|
|
|
|
Liabilities and
shareholders' equity |
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable |
$ |
41,831 |
|
|
$ |
32,866 |
|
Accrued
expenses and other current liabilities |
314,558 |
|
|
407,704 |
|
Current
portion of long-term obligations |
58,906 |
|
|
33,948 |
|
Total
current liabilities |
415,295 |
|
|
474,518 |
|
Long-term
obligations |
836,208 |
|
|
780,407 |
|
Other liabilities |
288,525 |
|
|
348,797 |
|
Total
liabilities |
1,540,028 |
|
|
1,603,722 |
|
|
|
|
|
Shareholders'
equity |
588,696 |
|
|
686,864 |
|
Total
liabilities and shareholders' equity |
$ |
2,128,724 |
|
|
$ |
2,290,586 |
|
Investors & Media:
Julie D.
Tracy
Sr. Vice President, Chief Communications
OfficerWright Medical Group N.V.(901)
290-5817julie.tracy@wright.com
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