- Total Sales: $316.7 million, a year-over-year increase of 4% as reported and 4.3% in constant currency.
- GAAP Net Income: $49 million, compared to $15.8 million in Q3 2023.
- Adjusted Net Income: $32.7 million, a 15% increase year-over-year.
- Adjusted Diluted EPS: $1.05, a 16.7% increase year-over-year.
- US Sales Growth: 7.4% increase versus the prior year quarter.
- International Sales Growth: 0.2% increase.
- Worldwide Orthopedics Growth: 5.2% increase.
- US Orthopedic Sales Growth: 7.4% increase.
- International Orthopedic Sales Growth: 3.9% increase.
- Worldwide General Surgery Revenue Growth: 3.6% increase.
- US General Surgery Revenue Growth: 7.4% increase.
- International General Surgery Revenue Decline: 5.0% decrease.
- Adjusted Gross Margin: 56.5%, an increase of 60 basis points compared to the prior year quarter.
- Research and Development Expense: 4.3% of sales, 20 basis points higher than the prior year quarter.
- Adjusted SG&A Expenses: 37.2% of sales, 50 basis points lower than the prior year quarter.
- Adjusted Effective Tax Rate: 21.0%.
- Cash Flow from Operations: $51.2 million, compared to $46.1 million in Q3 2023.
- Capital Expenditures: $3.4 million, compared to $5.4 million a year ago.
- Long Term Debt: $940 million, down from $965 million as of June 30th.
- Leverage Ratio: 3.6 times.
- Q4 Revenue Guidance: $339 million to $344 million.
- Full Year Revenue Guidance: $1.3 billion to $1.305 billion.
- Q4 EPS Guidance: $1.18 to $1.23, representing growth between 11% and 16%.
- Full Year EPS Guidance: $4.00 to $4.05, representing growth between 15.9% and 17.4%.
Release Date: October 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Conmed Corp (CNMD, Financial) reported a year-over-year increase in total sales by 4.3% in constant currency for the third quarter of 2024.
- Adjusted net income increased by 15% year-over-year, and adjusted diluted net earnings per share rose by 16.7%.
- The company's U.S. sales increased by 7.4%, indicating strong domestic performance.
- Conmed Corp (CNMD) has made progress in improving its orthopedic business supply chain, which is expected to continue in the fourth quarter.
- The company has a solid cash flow, with cash flow from operations in the quarter reaching $51.2 million, up from $46.1 million in the third quarter of 2023.
Negative Points
- International sales growth was minimal at 0.2%, indicating challenges in markets outside the U.S.
- The company faced manufacturing slowdowns due to hurricanes, impacting production and potentially delaying recovery in the fourth quarter.
- General surgery revenue internationally declined by 5.0%, reflecting a weaker performance compared to the previous year.
- Inventory days increased to 224 from 196 at the end of June, indicating potential inefficiencies in inventory management.
- The company is still working on resolving supply chain issues in its orthopedic business, which were exacerbated by recent hurricanes.
Q & A Highlights
Q: Can you provide more details on the general surgery segment, which came in lighter than expected?
A: Todd Garner, CFO, explained that the lighter performance was due to a strong prior year quarter when the company was recovering from back orders, particularly in international markets. Curt Hartman, CEO, added that circuit board availability impacted generators and energy platforms, affecting sales.
Q: Are the orthopedic supply chain issues expected to extend into 2025?
A: Todd Garner, CFO, mentioned that progress has been made, but the hurricanes were a setback. The company remains focused on resolving these issues and getting back on track.
Q: What is the status of the supply chain issues in the orthopedics business, and are specific implantables still affected?
A: Patrick Beyer, President of International and Global Orthopedics, stated that improvements have been made across all categories. The focus is on increasing manufacturing capabilities and improving vendor supply chains.
Q: Is 2025 expected to be a year of high single to double-digit growth for Conmed?
A: Curt Hartman, CEO, deferred specific guidance to January 2025 but expressed confidence in the company's setup for growth, emphasizing the focus on reinvigorating the top line.
Q: How did the Buffalo Filter perform in the quarter, and is the smoke evacuation issue resolved?
A: Todd Garner, CFO, confirmed that the smoke evacuation issue was resolved in Q2, and Q3 showed improvement, although not fully back to normal trends.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
