Tornier Reports Fourth Quarter and Full Year 2014 Results and Provides 2015 Outlook

• Fourth quarter revenue increased 14.1% over prior year quarter, in constant currency
• Upper extremity constant currency revenue growth of 22.1% led by Aequalis Ascend Flex
• Full year adjusted gross margin increased by 180 basis points to 76.0%

AMSTERDAM, The Netherlands, Feb. 24, 2015 (GLOBE NEWSWIRE) -- Tornier N.V. TRNX, a global medical device company focused on providing surgical solutions to orthopaedic extremity specialists, reported today its financial results for the fourth quarter and full year ended December 28, 2014.

Revenue for the fourth quarter of 2014 was $92.4 million compared to fourth quarter 2013 revenue of $83.4 million, an increase of 10.8% as reported and 14.1% in constant currency. Revenue for the full year ended December 28, 2014 was $345.0 million compared to 2013 revenue of $311.0 million, an increase of 10.9% as reported and 11.2% in constant currency.

Fourth quarter 2014 revenue of Tornier's extremities product categories totaled $77.0 million compared to $68.1 million a year ago, an increase of 13.0% as reported and 15.5% in constant currency. For the full year 2014, revenue of Tornier's extremities product categories was $286.7 million compared to $258.0 million a year ago, an increase of 11.2% as reported and 11.5% in constant currency.

Dave Mowry, President and Chief Executive Officer of Tornier, commented, "Our fourth quarter revenue was in-line with the preliminary results we released in January and reflects the strong performance by Tornier's global sales organization across our key products. The continued growth was led by our Aequalis Ascend Flex shoulder system and our broad ankle arthritis portfolio. Looking toward 2015, we believe we are well positioned to further improve upon sales force productivity in our dedicated upper and lower extremities teams, driven by ongoing sales rep training programs and new product launches."

Mr. Mowry continued, "We are pleased with the consistent and steady improvement reflected in adjusted gross margin over the course of the year, which for the full year reached 76.0%. Tornier is well positioned to continue to drive gross margin expansion through additional efficiency improvement and manufacturing in-sourcing initiatives."

The Company's fourth quarter 2014 adjusted EBITDA, as defined in the GAAP to non-GAAP reconciliation provided later in this release, was $14.3 million, or 15.5% of reported revenue, compared to $9.2 million, or 11.0% of revenue, in the same quarter of the prior year. For the full year ended December 28, 2014, adjusted EBITDA increased to $34.0 million, or 9.8% of reported revenue, compared to $30.4 million, or 9.8% of revenue in 2013.

Fourth Quarter 2014 Revenue Highlights

Extremities

• Revenue from the upper extremities joints and trauma category was $57.5 million, an increase of 22.1% in constant currency over the same quarter in 2013. This growth was led by the Aequalis Ascend family of shoulder joint replacement products, which continued to gain global surgeon acceptance.

• Revenue from Tornier's lower extremities joints and trauma category in the fourth quarter of 2014 reached $15.9 million, a decrease of 1.0% in constant currency. Strong sales growth from the Company's ankle arthritis products, including the Salto, Salto-Talaris and Salto-Talaris XT total ankle arthroplasty systems, was more than offset by lower sales of core foot fixation products.

• Revenue from the sports medicine and biologics product category was $3.6 million in the fourth quarter of 2014, an increase of 1.2% in constant currency over the same quarter in 2013, reflecting a slight volume increase in the Company's soft tissue anchor product volume, partially offset by a decline in the Company's biologics products.

Large Joints

Constant currency revenue growth for large joints and other products was 8.1% in the fourth quarter of 2014 and was led by the Company's hip products that benefitted from the release of new minimally invasive instrumentation in Europe late in 2013.

Geographic Revenue

On a geographic basis as compared to the fourth quarter of 2013, Tornier's international revenue increased 8.9% as reported and 16.6% in constant currency, representing 42% of reported global revenue. Revenue in the United States increased by 12.2% and represented 58% of reported global revenue.  

Fiscal Year 2015 Outlook

The following guidance assumes Tornier continues to be a standalone business for the full year of 2015. This guidance does not include any revenue or cost synergies or dis-synergies from the proposed merger with Wright Medical Group, but it does anticipate some impact from distraction related to the announcement of the pending merger, particularly in the lower extremities business.

• The Company projects 2015 constant currency revenue to be in the range of $359 to $371 million, representing a change in constant currency of 4.1% to 7.6% over last year.
• Based on current rates, foreign currency exchange rates are expected to have a negative impact of approximately $21 million dollars on full year reported revenue. 2015 reported revenue is projected to be in the range of $338.3 to $349.6 million, representing a change of (1.9%) to 1.3% over last year.
• Constant currency revenue from Tornier's extremities product categories in 2015 is expected to be in the range of $302 to $312 million, representing growth in constant currency of 5.3% to 8.8% over last year. This growth is expected to be driven primarily by strength in upper extremities.
• The Company projects 2015 earnings per share to be in the range of ($0.65) to ($0.38) per share.
• The Company projects 2015 adjusted EBITDA to be in the range of $35 to $39 million, or 10.3% to 11.2% of reported revenue.

Conference Call

Tornier will host a conference call today at 4:30 p.m. eastern time to discuss its fourth quarter and full year 2014 financial results and its outlook for 2015. The conference call will be available to interested parties through a live audio webcast available through the Company's website at www.tornier.com. Those without internet access may join the call from within the U.S. by dialing (877) 673-5355; outside the U.S., dial (760) 666-3805.

A telephone replay will be available for ten days following the call by dialing (855) 859-2056 for domestic participants and (404) 537-3406 for international participants. When prompted, please enter the replay pin number 73187568. For those who are not available to listen to the live webcast, the call will be archived for one year on Tornier's website.

Forward-Looking Statements

Statements contained in this release that relate to future, not past, events are forward-looking statements under the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on current expectations of future events and often can be identified by words such as "believe," "expect," "should," "project," "anticipate," "intend," "will," "can," "may," "could," "continue," "outlook," "guidance," "future," other words of similar meaning or the use of future dates.  Examples of forward-looking statements in this release include Tornier's financial guidance for the full year 2015 and Tornier's expectations to improve sales force productivity and drive gross margin expansion through improved efficiency and manufacturing in-sourcing initiatives during 2015.  Forward-looking statements by their nature address matters that are, to different degrees, uncertain.  Uncertainties and risks may cause Tornier's actual results to be materially different than those expressed in or implied by Tornier's forward-looking statements. For Tornier, such uncertainties and risks include, among others,  risks relating to Tornier's proposed merger with Wright Medical Group, Inc., including the timing of the transaction; uncertainties as to whether Tornier shareholders and Wright shareholders will approve the transaction; the risk that competing offers will be made; the possibility that various closing conditions for the transaction may not be satisfied or waived, including that a governmental entity may prohibit, delay or refuse to grant approval for the consummation of the transaction, or the terms of such approval; the effects of disruption from the transaction making it more difficult to maintain relationships with employees, customers, vendors and other business partners; the risk that shareholder litigation in connection with the transaction may result in significant costs of defense, indemnification and liability; other business effects, including the effects of industry, economic or political conditions outside of Wright's or Tornier's control; the failure to realize synergies and cost-savings from the transaction or delay in realization thereof; the businesses of Wright and Tornier may not be combined successfully, or such combination may take longer, be more difficult, time-consuming or costly to accomplish than expected; operating costs and business disruption following completion of the transaction, including adverse effects on employee retention and on Wright's and Tornier's respective business relationships with third parties; transaction costs; actual or contingent liabilities; the adequacy of the combined company's capital resource; and other risks and uncertainties, including Tornier's future operating results and financial performance; Tornier's reliance on its independent sales agencies and distributors to sell its products and the effect on its business and operating results of agency and distributor changes, transitions to direct selling models in certain geographies and the recent transition of its U.S. sales channel towards focusing separately on upper and lower extremity products; fluctuations in foreign currency exchange rates; the effect of global economic conditions; the European sovereign debt crisis and austerity measures; risks associated with Tornier's international operations and expansion; the timing of regulatory approvals and introduction of new products; physician acceptance, endorsement, and use of new products; the effect of regulatory actions, changes in and adoption of reimbursement rates and product recalls; competitor activities; Tornier's manufacturing capacity; Tornier's leverage and access to credit under its credit agreement; and changes in tax and other legislation. More detailed information on these and other factors that could affect Tornier's actual results are described in Tornier's filings with the U.S. Securities and Exchange Commission, including its most recently filed annual report on Form 10-K for the fiscal year ended December 29, 2013 and subsequent quarterly reports on Form 10-Q and its annual report on Form 10-K for the fiscal year ended December 28, 2014 anticipated to be filed by Tornier.  Tornier undertakes no obligation to update its forward-looking statements.

About Tornier

Tornier is a global medical device company focused on providing solutions to surgeons who treat musculoskeletal injuries and disorders of the shoulder, elbow, wrist, hand, ankle and foot. The Company's broad offering of over 95 product lines includes joint replacement, trauma, sports medicine, and biologic products to treat the extremities, as well as joint replacement products for the hip and knee in certain international markets. Since its founding approximately 70 years ago, Tornier's "Specialists Serving Specialists" philosophy has fostered a tradition of innovation, intense focus on surgeon education, and commitment to advancement of orthopaedic technology stemming from its close collaboration with orthopaedic surgeons and thought leaders throughout the world. For more information regarding Tornier, visit www.tornier.com.

Tornier®, Aequalis®, Aequalis Ascend®, Aequalis Ascend® Flex™, Salto®,  Salto Talaris® and Salto Talaris® XT™ are trademarks of Tornier N.V and its subsidiaries, 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.

Use of Non-GAAP Financial Measures

To supplement Tornier's consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP), Tornier uses certain non-GAAP financial measures in this release. Reconciliations of the non-GAAP financial measures used in this release to the most comparable U.S. GAAP measures for the respective periods can be found in tables later in this release immediately following the detail of revenue by geography. Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for Tornier's financial results prepared in accordance with GAAP.

Tornier believes the non-GAAP financial measures presented above provide additional meaningful information for measuring Tornier's financial performance and are measures frequently used by Tornier's management, as well as securities analysts and investors. Tornier uses the non-GAAP financial measures as supplemental measures of its performance and believes such measures facilitate operating performance comparisons from period to period and company to company by factoring out potential differences caused by charges not related to Tornier's regular, ongoing business, including non-cash charges, certain large and unpredictable charges, acquisitions, dispositions, litigation settlements and tax positions. Tornier's management uses the non-GAAP financial measures to assess the performance of Tornier's core operations, analyze underlying trends in Tornier's businesses, establish operational goals and forecasts, and evaluate Tornier's performance period over period and in relation to the operating results of its competitors. Tornier's management uses the non-GAAP financial measures to help allocate its resources to both ongoing and prospective business initiatives and to help make budgeting and spending decisions, for example, between product development expenses, research and development expenses, and selling, general and administrative expenses. Tornier's management is evaluated on the basis of several of these non-GAAP financial measures when determining achievement of performance incentive compensation goals.

Tornier believes that non-GAAP financial measures have limitations as analytical tools since they do not reflect all of the amounts associated with Tornier's operating results as determined in accordance with GAAP and should only be used to evaluate Tornier's operating results in conjunction with the corresponding GAAP measures. Accordingly, revenue on a constant currency basis should not be used as a substitute for revenue, EBITDA, adjusted EBITDA, adjusted net income (loss) and adjusted net income (loss) per share should not be used as a substitute for net income or net income per share; adjusted EBITDA margin should not be used as a substitute for net margin or operating margin; free cash flow should not be used as a substitute for cash flows from operations; and adjusted gross margin and gross margin percentage should not be used as a substitute for gross margin or gross margin as a percentage of revenue, in each case as determined in accordance with GAAP. Neither EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted net income (loss), adjusted net income (loss) per share, free cash flow, adjusted gross margin and gross margin as a percentage of revenue, should be an indication of whether cash flow will be sufficient to fund Tornier's cash requirements. Additionally, the calculation of non-GAAP financial measures is not based on any comprehensive or standard set of accounting rules or principles. Accordingly, Tornier's definitions of revenue on a constant currency basis, EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted net income (loss), adjusted net income (loss) per share, free cash flow, adjusted gross margin and gross margin as a percentage of revenue, may differ from the definitions of other companies using the same or similar names limiting, to some extent, the usefulness of such measures for comparison purposes.

For further information regarding why Tornier believes that these non-GAAP financial measures provide useful information to investors, the specific manner in which management uses these measures, and some of the limitations associated with the use of these measures, please refer to Tornier's current report on Form 8-K filed today with the Securities and Exchange Commission which attaches this release as an exhibit. This current report on Form 8-K is available on the SEC's website at www.sec.gov or on Tornier's website at www.tornier.com.

Important Additional Information and Where to Find It

In connection with the proposed merger, Tornier has filed with the U.S. Securities and Exchange Commission (SEC) a registration statement on Form S-4 that includes a preliminary joint proxy statement of Wright and Tornier that also constitutes a preliminary prospectus of Tornier. The registration statement is not complete and will be amended. Once finalized, Wright and Tornier will make the final joint proxy statement/prospectus available to their respective shareholders. Investors are urged to read the final joint proxy statement/prospectus when it becomes available, because it will contain important information. The registration statement, definitive joint proxy statement/prospectus and other documents filed by Tornier and Wright with the SEC will be available free of charge at the SEC's website (www.sec.gov) and from Tornier and Wright. Requests for copies of the joint proxy statement/prospectus and other documents filed by Wright with the SEC may be made by contacting Julie D. Tracy, Senior Vice President and Chief Communications Officer by phone at (901) 290-5817 or by email at julie.tracy@wmt.com, and request for copies of the joint proxy statement/prospectus and other documents filed by Tornier may be made by contacting Shawn McCormick, Chief Financial Officer by phone at (952) 426-7646 or by email at shawn.mccormick@tornier.com.

Wright, Tornier, their respective directors, executive officers and employees may be deemed to be participants in the solicitation of proxies from Wright's and Tornier's respective shareholders in connection with the proposed transaction. Information about the directors and executive officers of Wright and their ownership of Wright stock is set forth in Wright's annual report on Form 10-K for the fiscal year ended December 31, 2013, which was filed with the SEC on February 27, 2014 and its proxy statement for its 2014 annual meeting of stockholders, which was filed with the SEC on March 31, 2014. Information regarding Tornier's directors and executive officers is contained in Tornier's annual report on Form 10-K for the fiscal year ended December 29, 2013, which was filed with the SEC on February 21, 2014, and its proxy statement for its 2014 annual general meeting of shareholders, which was filed with the SEC on May 16, 2014. These documents can be obtained free of charge from the sources indicated above. Certain directors, executive officers and employees of Wright and Tornier may have direct or indirect interest in the transaction due to securities holdings, vesting of equity awards and rights to severance payments. Additional information regarding the participants in the solicitation of Wright and Tornier shareholders will be included in the joint proxy statement/prospectus.