Wright Medical Technology     Print Page | Close Window

News Release

Tornier Reports Second Quarter 2011 Financial Results

August 9, 2011

Extremity Product Sales Growth Reported at 19%, 14% Constant Currency;

Sales and Adjusted EBITDA Guidance Maintained for 2011 

AMSTERDAM--(BUSINESS WIRE)-- Tornier N.V. (NASDAQ: TRNX), a global medical device company focused on providing surgical solutions to orthopaedic extremity specialists, reported sales of $65.2 million for the second quarter of 2011 compared to sales of $54.6 million for the second quarter 2010, an increase of 19.4% as reported and 12.2% in constant currency. Year to date sales were reported at $134.6 million compared to sales of $116.4 million in the first half of 2010, an increase of 15.6% as reported and 12.1% in constant currency. Second quarter 2011 sales of Tornier's extremity product categories increased 19.3% as reported, 14.4% in constant currency over the prior year's second quarter, and represented 78% of reported global sales.

Douglas W. Kohrs, President and Chief Executive Officer of Tornier, commented, "We are pleased to report double digit constant currency growth in the second quarter despite a challenging health care utilization environment. Upper extremities lead our global growth as the new Aequalis™ Ascend™ shoulder arthroplasty system continues to exceed our expectations while our flagship Aequalis™ family of shoulder arthroplasty systems continues to grow. We also recognized double digit constant currency sales growth of our lower extremity and sports medicine/biologics product categories and we continue to expect these product lines to benefit in the second half from global expansion and several new product introductions."

The Company's second quarter 2011 adjusted EBITDA, as defined in the GAAP to non-GAAP reconciliation provided later in this release, was $6.2 million or 9.6% of sales, compared to $6.0 million in the same quarter last year. For the first six months of 2011, adjusted EBITDA reached $15.4 million or 11.4% of sales, compared to $10.8 million or 9.2% of sales in the same period last year.

Mr. Kohrs continued, "Our second quarter operating results met our expectations and we remain on track to demonstrate continued improvement in adjusted EBITDA for the full year, while maintaining our commitment to innovation, evidence-based medicine, and clinical education."

Sales and Product Review
Tornier's second quarter 2011 constant currency sales growth of 12.2% continued to be led by its extremity product line categories which together posted constant currency growth of 14.4% over second quarter 2010. Within the extremity products group, second quarter constant currency growth of the upper extremity category was 15.1% led by the new Aequalis™ Ascend™ arthroplasty system. The recent international launch of the new Simpliciti™ stemless shoulder system is expected to contribute to upper extremity sales growth in the second half of 2011. Tornier's lower extremity and sports medicine and biologics product categories posted constant currency sales growth rates of 11.2% and 11.8%, respectively, in the second quarter over the same quarter last year. The lower extremity product category is beginning to benefit from the expanded instrument set availability for key new products such as the Stabilis™ ankle fusion system and the Wave® calcaneal fracture system. Tornier's sports medicine and biologics product category has seen the early benefit of the launch of the BioFiber® surgical mesh and expanded availability in our international markets. Tornier's large joint product category again posted above market constant currency growth in the second quarter at 4.5% over the same quarter last year, primarily as the result of favorable reception to the Company's total hip arthroplasty systems.

On a geographic basis as compared to second quarter 2010, Tornier's second quarter 2011 sales in the United States increased by 12.1% and represented 53% of global sales. International sales increased 28.7% in the quarter as reported and 12.3% in constant currency, representing 47% of global sales.

Outlook
The Company is confirming and narrowing its previous guidance and now projects 2011 sales in the range of $260 to $265 million, representing growth of 14% to 17% as reported, and 12% to 14% in constant currency over 2010 sales. The Company projects 2011 adjusted EBITDA, as described in the GAAP to non-GAAP reconciliation provided later in this release, of $29 to $32 million or 11% to 12% of total sales.

For the third quarter of 2011, the Company projects sales in the range of $57.0 to $59.0 million, representing growth of 15% to 19%, based on recent currency exchange rates, and 12% to 16% in constant currency over third quarter 2010. The Company projects adjusted EBITDA for the third quarter of 2011 of $4.5 to $5.5 million, representing 8% to 9% of sales.

Earnings Call Information
Tornier will host a conference call today at 5:30 p.m. eastern time to discuss its second quarter 2011 financial results. The conference call will be available to interested parties through a live audio webcast available through the Company's website at www.tornier.com where it will be available for replay beginning two hours after completion of the call and archived and accessible for approximately 12 months. Those without internet access may join the call from within the U.S. by dialing 877-673-5355; outside the U.S., dial +1-760-666-3805.

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 "expect," "should," "project," "anticipate," "intend," "will," "may," "believe," "could," "would," "continue," "outlook," "guidance," other words of similar meaning or the use of future dates. 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, Tornier's future operating results and financial performance, fluctuations in foreign currency exchange rates, the effect of global economic conditions, 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, potential product recalls, competitor activities and the costs and effects of litigation 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 recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q. Tornier undertakes no obligation to update its forward-looking statements.

About Tornier
Tornier is a global medical device company focused on serving extremities specialists who treat orthopaedic conditions of the shoulder, elbow, wrist, hand, ankle and foot. The Company's broad offering of over 80 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.

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 N.V.
Consolidated Statements of Operations
(in thousands, except per share data)
               
Three Months Ended Six Months Ended
(unaudited) (unaudited)
July 3, 2011 July 4, 2010 July 3, 2011 July 4, 2010
Revenue $ 65,158 $ 54,563 $ 134,593 $ 116,406
Cost of goods sold   18,017     14,725     38,058     32,001  
Gross profit 47,141 39,838 96,535 84,405
 
Operating expenses
Sales and marketing 34,872 29,721 69,571 64,191
General and administrative 6,362 4,668 12,387 11,194
Research and development 5,189 4,003 10,299 8,816
Amortization of intangible assets 2,897 2,881 5,707 5,878
Special charges   132     28     132     252  
Total operating expenses 49,452 41,301 98,096 90,331
 
Operating (loss) (2,311 ) (1,463 ) (1,561 ) (5,926 )
 
Other income (expense)
Interest expense (489 ) (4,935 ) (2,967 ) (10,765 )
Foreign currency transaction gain (loss) 226 (3,445 ) 147 (5,739 )
Loss on extinguishment of debt - - (29,475 ) -
Other non-operating income (expense)   35     (153 )   16     61  
 
Loss before income taxes (2,539 ) (9,996 ) (33,840 ) (22,369 )
Income tax (expense) benefit   (330 )   1,393     7,002     3,715  
 
Consolidated net loss (2,869 ) (8,603 ) (26,838 ) (18,654 )
Net loss attributable to non-controlling interest   -     -     -     (695 )
 
Net loss attributable to Tornier N.V. (2,869 ) (8,603 ) (26,838 ) (17,959 )
Accretion of non-controlling interest   -     -     -     (679 )
 
Net loss attributable to ordinary shareholders $ (2,869 ) $ (8,603 ) $ (26,838 ) $ (18,638 )
 
Net loss per share
Basic and diluted $ (0.07 ) $ (0.31 ) $ (0.72 ) $ (0.72 )
 
Weighted average ordinary shares outstanding
Basic and diluted 39,040 27,411 37,248 26,039
 
 
Tornier N.V.
Condensed Consolidated Balance Sheets
(in thousands)
       
July 3, 2011 January 2, 2011
(unaudited)
Assets
Current assets
Cash and cash equivalents $ 59,733 $ 24,838
Accounts receivable, net 47,666 42,758
Inventories 86,191 77,525
Deferred income taxes and other current assets   19,870   28,093
Total current assets 213,460 173,214
 
Instruments, net 47,480 42,378
Property, plant and equipment, net 34,825 33,680
Goodwill and intangibles, net 248,456 240,854
Deferred income taxes and other assets   1,144   1,052
Total assets $ 545,365 $ 491,178
 
Liabilities and shareholders' equity
Current liabilities
Short-term borrowing and current portion of long-term debt $ 13,572 $ 28,392
Accounts payable 16,765 12,890
Accrued liabilities and deferred income taxes   34,641   34,967
Total current liabilities 64,978 76,249
 
Notes payable - 84,261
Other long-term debt 27,272 25,467
Deferred income taxes and other long-term liabilities   28,280   34,962
Total liabilities 120,530 220,939
 
Shareholders' equity 424,835 270,239
   
Total liabilities and shareholders' equity $ 545,365 $ 491,178
 
 
Tornier N.V.
Consolidated Statements of Cash Flow
(in thousands)
               
Three Months Ended Six Months Ended
(unaudited) (unaudited)
 
July 3, 2011 July 4, 2010 July 3, 2011 July 4, 2010

Cash flows from operating activities

Consolidated net loss $ (2,869 ) $ (8,603 ) $ (26,838 ) $ (18,654 )
 
Adjustments to reconcile consolidated net loss to net cash provided by (used in) operating activities
Depreciation and amortization 6,798 6,202 13,891 13,011
Non-cash foreign currency (gain) loss (30 ) 2,429 603 4,106
Deferred and prepaid income taxes 1,904 (1,579 ) (6,165 ) (3,722 )
Share-based compensation 1,615 1,276 2,910 2,835
Non-cash interest expense and discount amortization - 4,622 2,040 9,819
Inventory obsolescence 870 1,256 2,466 2,738
Change in fair value of warrant liability - (271 ) - (418 )
Loss on extinguishment of debt - - 29,475 -
Other non-cash items affecting earnings 231 960 336 1,245
 
Changes in operating assets and liabilities
Accounts receivable 2,235 60 (3,657 ) (1,378 )
Inventories (4,645 ) (5,711 ) (6,680 ) (10,443 )
Accounts payable and accruals 337 (474 ) 2,011 5,186
Other current assets and liabilities (199 ) (698 ) 3,295 (1,894 )
Other non-current assets and liabilities   (734 )   (716 )   (1,222 )   78  
Net cash provided by (used in) operating activities 5,513 (1,247 ) 12,465 2,509
 
Cash flows from investing activities
Acquisition-related cash payments (1,154 ) (591 ) (1,635 ) (1,652 )
Additions of instruments (5,582 ) (4,685 ) (8,456 ) (7,854 )
Purchases of property, plant and equipment   (762 )   (1,072 )   (1,476 )   (5,651 )
Net cash provided by (used in) investing activities (7,498 ) (6,348 ) (11,567 ) (15,157 )
 
Cash flows from financing activities
Change in short-term debt (3,832 ) 10,265 (16,764 ) 13,801
Repayments of long-term debt (1,945 ) (4,688 ) (4,015 ) (7,297 )
Proceeds from issuance of long-term debt 3,509 (1,199 ) 3,509 2,165
Deferred financing costs (215 ) (525 ) (2,629 ) (525 )
Repayment of notes payable - - (116,108 ) -
Issuance of ordinary shares   51     397     168,308     938  
Net cash provided by (used in) financing activities (2,432 ) 4,250 32,301 9,082
 
Effect of currency exchange rates on cash and cash equivalents   36     (1,757 )   1,696     (1,194 )
 
Increase (decrease) in cash and cash equivalents (4,381 ) (5,102 ) 34,895 (4,760 )
 
Cash and cash equivalents at beginning of period   64,114     38,311     24,838     37,969  
 
Cash and cash equivalents at end of period $ 59,733   $ 33,209   $ 59,733   $ 33,209  
 
 
Tornier N.V.
Selected Revenue Information
(in thousands)
                       
Three Months Ended Six Months Ended
(unaudited)   (unaudited)  
Percent Percent
July 3, 2011 July 4, 2010 change July 3, 2011 July 4, 2010 change
Revenue by product category
Upper extremity joints and trauma $ 40,795 $ 33,940 20.2 % $ 82,950 $ 70,587 17.5 %
Lower extremity joints and trauma 6,447 5,592 15.3 % 13,079 11,848 10.4 %
Sports medicine and biologics   3,583   3,076 16.5 %   7,440   6,517 14.2 %
Total extremities 50,825 42,608 19.3 % 103,469 88,952 16.3 %
Large joints and other   14,333   11,955 19.9 %   31,124   27,454 13.4 %
Total $ 65,158 $ 54,563 19.4 % $ 134,593 $ 116,406 15.6 %
 
Revenue by geography
United States $ 34,395 $ 30,669 12.1 % $ 71,416 $ 64,464 10.8 %
International   30,763   23,894 28.7 %   63,177   51,942 21.6 %
Total $ 65,158 $ 54,563 19.4 % $ 134,593 $ 116,406 15.6 %
 
 
Tornier N.V.
Reconciliation of Revenue to Non-GAAP Revenue on a Constant Currency Basis
(in thousands)
                   
Three Months Ended
(unaudited)
July 3, 2011 July 4, 2010
Foreign Percent
exchange change on
impact as Revenue on a a constant
Revenue as compared to constant Revenue as currency
reported prior period currency basis reported basis
Revenue by product category
Upper extremity joints and trauma $ 40,795 $ (1,715 ) $ 39,080 $ 33,940 15.1 %
Lower extremity joints and trauma 6,447 (231 ) 6,216 5,592 11.2 %
Sports medicine and biologics   3,583     (145 )   3,438     3,076   11.8 %
Total extremities 50,825 (2,091 ) 48,734 42,608 14.4 %
Large joints and other   14,333     (1,836 )   12,497     11,955   4.5 %
Total $ 65,158   $ (3,927 ) $ 61,231   $ 54,563   12.2 %
 
Revenue by geography
United States $ 34,395 $ - $ 34,395 $ 30,669 12.1 %
International   30,763     (3,927 )   26,836     23,894   12.3 %
Total $ 65,158   $ (3,927 ) $ 61,231   $ 54,563   12.2 %
 
 
Six Months Ended
(unaudited)
July 3, 2011 July 4, 2010
Foreign Percent
exchange change on
impact as Revenue on a a constant
Revenue as compared to constant Revenue as currency
reported prior period currency basis reported basis
Revenue by product category
Upper extremity joints and trauma $ 82,950 $ (1,890 ) $ 81,060 $ 70,587 14.8 %
Lower extremity joints and trauma 13,079 (264 ) 12,815 11,848 8.2 %
Sports medicine and biologics   7,440     (159 )   7,281     6,517   11.7 %
Total extremities 103,469 (2,313 ) 101,156 88,952 13.7 %
Large joints and other   31,124     (1,742 )   29,382     27,454   7.0 %
Total $ 134,593   $ (4,055 ) $ 130,538   $ 116,406   12.1 %
 
Revenue by geography
United States $ 71,416 $ - $ 71,416 $ 64,464 10.8 %
International   63,177     (4,055 )   59,122     51,942   13.8 %
Total $ 134,593   $ (4,055 ) $ 130,538   $ 116,406   12.1 %
 
 
Tornier N.V.
Reconciliation of Net Loss to
Non-GAAP Adjusted Earnings Before Interest, Taxes, Depreciation
and Amortization (EBITDA)
(in thousands)
               
Three Months Ended Six Months Ended
(unaudited) (unaudited)
July 3, 2011 July 4, 2010 July 3, 2011 July 4, 2010
Net loss, as reported $ (2,869 ) $ (8,603 ) $ (26,838 ) $ (18,654 )
 
Interest expense 489 4,935 2,967 10,765
Income tax expense (benefit) 330 (1,393 ) (7,002 ) (3,715 )
Depreciation 3,901 3,321 8,184 7,133
Amortization   2,897     2,881     5,707     5,878  
 
Subtotal Non-GAAP EBITDA (Loss) 4,748 1,141 (16,982 ) 1,407
 
Other non-operating (income) expense (35 ) 153 (16 ) (61 )
Foreign currency transaction (gain) loss (226 ) 3,445 (147 ) 5,739
Share-based compensation 1,615 1,276 2,910 2,835
Loss on extinguishment of debt - - 29,475 -
Special charges 132 28 132 252
Operating expenses from consolidated VIE   -     -     -     594  
 
Non-GAAP Adjusted EBITDA $ 6,234   $ 6,043   $ 15,372   $ 10,766  
 

Tornier N.V.
Carmen Diersen
Chief Financial Officer
952-426-7646
cdiersen@tornier.com
or
Doug Kohrs
President and Chief Executive Officer
952-426-7606
dkohrs@tornier.com

Source: Tornier N.V.

News Provided by Acquire Media