CONMED Beats, Earnings Rise 5.3% - Analyst Blog

CONMED Corporation CNMD posted adjusted earnings per share of 49 cents for the 2014-first quarter, up 8.9% from 45 cents in the same quarter of 2013 as well as the Zacks Consensus Estimate by a couple of cents. Net earnings improved 5.3% to $13.5 million from $12.9 million in the same quarter of 2013.

Revenues in the quarter dipped 2.7% (2.1% on a constant currency basis) to $181.9 million. The decrease was attributable to weaker sales of capital products. International sales in the quarter were $94.6 million, accounting for 52.0% of total sales.

Revenues from orthopedic surgery business edged up 0.9% (or 1.9% in constant currency) to $105.9 million. Revenues from general surgery were down 4.9% (or 4.6% in constant currency) to $63.5 million. Revenues from surgical visualization slipped 17.8% (or 17.1% in constant currency) to $12.5 million.

Margins

Adjusted operating earnings in the quarter rose 11.1% to $21.5 million. Adjusted margin in the quarter rose 150 basis points (bps) to 11.8% from 10.3% in the first quarter of 2013.

Adjusted EBITDA scaled up 4.0% to $33.4 million in the quarter. Adjusted EBITDA margin rose 120 bps to 18.3% from 17.1% in the first quarter of 2013.

Financial Position

CONMED exited the year with cash and cash equivalents of $56.3 million as of Mar 31, 2014, up 3.4% from $54.4 million as of Dec 31, 2013. Long-term debt (inclusive of current portion) increased 12.5% to $242.6 million from $215.6 million as of Dec 31, 2013. Consequently, long-term-debt-to-capitalization ratio rose 270 bps to 28.9% from 26.2% as of Dec 31, 2013.

In the quarter, CONMED's operating cash flow increased more than threefold to $17.0 million versus $5.5 million in the prior-year quarter, mainly due to lower accounts receivable. Capital expenditures fell 1.6% to $4.1 million in the quarter.

Guidance

For the 2014-second quarter, CONMED expects revenues in the band of $190–$195 million. Meanwhile, adjusted earnings per share are expected between 44 and 48 cents for the quarter.

For full year 2014, CONMED reiterated its revenues guidance in the range of $770 to $780 million, reflecting a 1–2% rise from 2013 based on continued single use products sales growth and improved capital products sales. It compared with the Zacks Consensus Estimate of $776 million.

Adjusted earnings per share continued to be anticipated between $1.90 and $2.00 compared with the Zacks Consensus Estimate of $1.94. The expected earnings per share implies a 5–10.5% rise from 2013.

Zacks Rank

Currently, CONMED carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the medical/dental supplies industry include Align Technology Inc. ALGN, Cardinal Health, Inc. CAH, and The Cooper Companies Inc. COO. All these stocks carry a Zacks Rank #2 (Buy).