AMSTERDAM, The Netherlands, Feb. 20, 2014 (GLOBE NEWSWIRE) -- Tornier N.V. (Nasdaq: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 fiscal year ended December 29, 2013.
Revenue for the fourth quarter of 2013 was $83.4 million compared to fourth quarter 2012 revenue of $79.0 million, an increase of 5.5% as reported and 4.4% in constant currency. Revenue for the fiscal year ended December 29, 2013 totaled $311.0 million, compared to 2012 revenue of $277.5 million, an increase of 12.0% as reported and 11.3% in constant currency.
Fourth quarter 2013 revenue of Tornier's extremities product categories totaled $68.1 million compared to $64.7 million a year ago, an increase of 5.2% as reported and 4.8% in constant currency. For the fiscal year 2013, revenue of Tornier's extremities product categories was $258.0 million compared to $224.9 million a year ago, an increase of 14.7% as reported and 14.4% in constant currency.
Giving pro forma effect to Tornier's fourth quarter 2012 acquisition of OrthoHelix Surgical Designs, Inc. to include OrthoHelix revenue in the full prior year period, Tornier's 2013 fourth quarter constant currency revenue growth was 4.0%, and extremities products constant currency revenue increased 4.3%. Pro forma constant currency revenue growth for the fiscal year 2013 was 3.5%, and pro forma extremities products constant currency revenue increased 4.7%.
Dave Mowry, President and Chief Executive Officer of Tornier, commented, "We completed the first phase of our U.S. sales force transition during the fourth quarter, ahead of our original timeline. This now positions us to focus on the next phase of the transition – training and maximizing rep productivity to drive both market expansion and penetration."
Mr. Mowry continued, "I am pleased with the progress we are making on developing and launching new products both in the U.S. and international markets. We now have over 150 physicians trained and using the Aequalis Ascend Flex convertible shoulder system, well ahead of our initial launch goal of 100 by year end 2013. In addition, we have recently received both product and reimbursement approval for the Aequalis Reversed shoulder in Japan and look forward to the launch in the second quarter of 2014."
The Company's fourth quarter 2013 adjusted EBITDA, as defined in the GAAP to non-GAAP reconciliation provided later in this release, was $9.2 million, or 11.0% of reported revenue, compared to $11.0 million, or 13.9% of revenue, in the same quarter of the prior year. For the fiscal year ended December 29, 2013, adjusted EBITDA decreased to $30.4 million, or 9.8% of reported revenue, compared to $32.9 million, or 11.9% of revenue in 2012.
Fourth Quarter 2013 Revenue Highlights
Extremities
Large Joints
Revenue of the Company's large joints and other product lines was $15.3 million, an increase of 2.5% in constant currency over the same quarter in 2012. In the fourth quarter of 2013, this product category represented 18.3% of the Company's reported global revenue compared to 18.1% in the prior year period.
Geographic Revenue
On a geographic basis as compared to the fourth quarter of 2012, Tornier's international revenue increased 7.9% as reported and 5.2% in constant currency, representing 42.6% of reported global revenue. Revenue in the United States increased by 3.8% and represented 57.4% of reported global revenue. Giving pro forma effect to the OrthoHelix acquisition to include OrthoHelix revenue for the full fourth quarter of 2012, revenue in the United States increased by 3.2% during the fourth quarter of 2013 compared to the prior year quarter.
First Quarter 2014 Outlook
Fiscal Year 2014 Outlook
Conference Call
Tornier will host a conference call today at 4:30 p.m. eastern time to discuss its fourth quarter 2013 financial results and its initial outlook for 2014. 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 51024933. 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 "expect," "should," "project," "anticipate," "intend," "will," "can," "may," "believe," "could," "should," "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 first quarter and full year 2014 and the expected timing of the launch of Aequalis Reversed in Japan. 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; 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; risks associated with Tornier's acquisition of OrthoHelix and subsequent integration activities; 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 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 recent quarterly report on Form 10-Q and annual report on Form 10-K for the fiscal year ended December 29, 2013 anticipated to be filed shortly with the SEC. 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® Reversed™, Aequalis Ascend® Flex™, BioFiber®, Insite® FT™ and Phantom Fiber™ 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 N.V. | ||||
Consolidated Statements of Operations | ||||
(in thousands, except per share data) | ||||
Three months ended | Year ended | |||
(unaudited) | (unaudited) | |||
December 29, 2013 | December 30, 2012 | December 29, 2013 | December 30, 2012 | |
Revenue | $ 83,392 | $ 79,033 | $ 310,959 | $ 277,520 |
Cost of goods sold | 20,803 | 22,435 | 80,264 | 76,964 |
Cost of goods sold - acquisition related | 464 | 4,539 | 5,908 | 4,954 |
Gross profit | 62,125 | 52,059 | 224,787 | 195,602 |
74.5% | 65.9% | 72.3% | 70.5% | |
Operating expenses | ||||
Selling, general and administrative | 56,451 | 46,290 | 206,851 | 170,447 |
Research and development | 5,997 | 6,195 | 22,387 | 22,524 |
Amortization of intangible assets | 4,288 | 3,708 | 15,885 | 11,721 |
Special charges | 2,729 | 9,831 | 3,738 | 19,244 |
Total operating expenses | 69,465 | 66,024 | 248,861 | 223,936 |
Operating loss | (7,340) | (13,965) | (24,074) | (28,334) |
Other income (expense) | ||||
Interest income | 64 | 34 | 245 | 338 |
Interest expense | (1,502) | (2,303) | (7,256) | (3,733) |
Foreign currency transaction loss | (749) | (278) | (1,820) | (473) |
Loss on extinguishment of debt | -- | (593) | (1,127) | (593) |
Other non-operating (expense) income | (228) | 62 | (45) | 116 |
Loss before income taxes | (9,755) | (17,043) | (34,077) | (32,679) |
Income tax (expense) benefit | (944) | 12,240 | (2,349) | 10,935 |
Consolidated net loss | $ (10,699) | $ (4,803) | $ (36,426) | $ (21,744) |
Net loss per share | ||||
Basic and diluted | $ (0.22) | $ (0.12) | $ (0.79) | $ (0.54) |
Weighted average ordinary shares outstanding | ||||
Basic and diluted | 48,478 | 41,639 | 45,826 | 40,064 |
Tornier N.V. | ||
Condensed Consolidated Balance Sheets | ||
(in thousands) | ||
December 29, 2013 | December 30, 2012 | |
(unaudited) | ||
Assets | ||
Current assets | ||
Cash and cash equivalents | $ 56,784 | $ 31,108 |
Accounts receivable, net | 55,555 | 54,192 |
Inventories | 87,011 | 86,697 |
Deferred income taxes and other current assets | 27,175 | 25,321 |
Total current assets | 226,525 | 197,318 |
Instruments, net | 63,055 | 51,394 |
Property, plant and equipment, net | 43,494 | 37,151 |
Goodwill and intangibles, net | 369,148 | 366,398 |
Deferred income taxes and other assets | 3,204 | 1,966 |
Total assets | $ 705,426 | $ 654,227 |
Liabilities and shareholders' equity | ||
Current liabilities | ||
Short-term borrowing and current portion of long-term debt | $ 1,438 | $ 4,595 |
Accounts payable | 17,326 | 11,526 |
Accrued liabilities, deferred income taxes and other current liabilities | 57,552 | 44,505 |
Total current liabilities | 76,316 | 60,626 |
Other long-term debt | 67,643 | 115,457 |
Deferred income taxes and other long-term liabilities | 35,659 | 42,065 |
Total liabilities | 179,618 | 218,148 |
Shareholders' equity | 525,808 | 436,079 |
Total liabilities and shareholders' equity | $ 705,426 | $ 654,227 |
Tornier N.V. | ||||
Consolidated Statements of Cash Flow | ||||
(in thousands) | ||||
Three months ended | Year ended | |||
(unaudited) | (unaudited) | |||
December 29, 2013 | December 30, 2012 | December 29, 2013 | December 30, 2012 | |
Cash flows from operating activities | ||||
Consolidated net loss | $ (10,699) | $ (4,803) | $ (36,426) | $ (21,744) |
Adjustments to reconcile consolidated net loss to net cash provided by operating activities | ||||
Depreciation and amortization | 9,763 | 8,834 | 36,566 | 30,232 |
Impairment of fixed assets | 140 | 1,013 | 140 | 2,041 |
Lease termination costs | -- | -- | -- | 731 |
Impairment of intangible assets | -- | 4,737 | -- | 4,737 |
Non-cash foreign currency loss (gain) | 750 | (278) | 1,829 | (495) |
Deferred income taxes | 1,637 | (4,359) | 3,566 | (4,506) |
Tax benefit from reversal of valuation allowance | (1,120) | (10,700) | (1,120) | (10,700) |
Share-based compensation | 3,547 | 1,722 | 8,300 | 6,830 |
Non-cash interest expense and discount amortization | 213 | 524 | 969 | 524 |
Inventory obsolescence | 2,065 | 5,258 | 8,447 | 8,171 |
Loss on extinguishment of debt | -- | -- | 1,127 | -- |
Lease incentives | -- | 1,400 | -- | 1,400 |
Gain from reversal of contingent consideration liability | (193) | -- | (5,140) | -- |
Inventory step up from acquisition | 464 | 1,993 | 5,908 | 1,993 |
Other non-cash items affecting earnings | 476 | (308) | 1,095 | 1,836 |
Changes in operating assets and liabilities | ||||
Accounts receivable | (6,484) | (6,721) | (1,084) | (2,188) |
Inventories | (3,344) | 417 | (9,186) | (3,057) |
Accounts payable and accruals | 7,110 | 3,516 | 7,421 | 87 |
Other current assets and liabilities | 2,301 | (209) | 4,704 | (1,526) |
Other non-current assets and liabilities | 35 | 1,259 | (2,134) | 65 |
Net cash provided by operating activities | 6,661 | 3,295 | 24,982 | 14,431 |
Cash flows from investing activities | ||||
Acquisition-related cash payments | (5,325) | (100,366) | (13,083) | (104,022) |
Additions of instruments | (7,240) | (2,754) | (23,805) | (11,999) |
Gain on sale of building | -- | 1,517 | -- | 1,517 |
Purchases of property, plant and equipment | (3,307) | (3,405) | (10,825) | (11,291) |
Net cash (used in) investing activities | (15,872) | (105,008) | (47,713) | (125,795) |
Cash flows from financing activities | ||||
Change in short-term debt | -- | (17,359) | (1,000) | (8,009) |
Repayments of long-term debt | (407) | (20,451) | (54,095) | (28,684) |
Proceeds from issuance of long-term debt | 1,796 | 115,873 | 1,796 | 121,045 |
Deferred financing costs | -- | (5,396) | (111) | (5,396) |
Issuance of ordinary shares | 1,580 | 602 | 100,433 | 7,710 |
Net cash provided by financing activities | 2,969 | 73,269 | 47,023 | 86,666 |
Effect of currency exchange rates on cash and cash equivalents | 474 | 1,053 | 1,384 | 1,100 |
(Decrease) increase in cash and cash equivalents | (5,768) | (27,391) | 25,676 | (23,598) |
Cash and cash equivalents at beginning of period | 62,552 | 58,499 | 31,108 | 54,706 |
Cash and cash equivalents at end of period | $ 56,784 | $ 31,108 | $ 56,784 | $ 31,108 |
Tornier N.V. | ||||||
Selected Revenue Information | ||||||
(in thousands) | ||||||
Three months ended | Year ended | |||||
(unaudited) | (unaudited) | |||||
December 29, 2013 |
December 30, 2012 |
Percent change |
December 29, 2013 |
December 30, 2012 |
Percent change |
|
Revenue by product category | ||||||
Upper extremity joints and trauma | $ 48,199 | $ 45,808 | 5.2% | $ 184,457 | $ 175,242 | 5.3% |
Lower extremity joints and trauma | 16,233 | 14,776 | 9.9% | 58,747 | 34,109 | 72.2% |
Sports medicine and biologics | 3,701 | 4,163 | -11.1% | 14,752 | 15,526 | -5.0% |
Total extremities | 68,133 | 64,747 | 5.2% | 257,956 | 224,877 | 14.7% |
Large joints and other | 15,259 | 14,286 | 6.8% | 53,003 | 52,643 | 0.7% |
Total | $ 83,392 | $ 79,033 | 5.5% | $ 310,959 | $ 277,520 | 12.0% |
Revenue by geography | ||||||
United States | $ 47,861 | $ 46,103 | 3.8% | $ 182,104 | $ 156,750 | 16.2% |
International | 35,531 | 32,930 | 7.9% | 128,855 | 120,770 | 6.7% |
Total | $ 83,392 | $ 79,033 | 5.5% | $ 310,959 | $ 277,520 | 12.0% |
Tornier N.V. | |||||
Reconciliation of Revenue to Non-GAAP Revenue on a Constant Currency Basis | |||||
(in thousands) | |||||
Three months ended | |||||
(unaudited) | |||||
December 29, 2013 | December 30, 2012 | ||||
Revenue as reported |
Foreign exchange impact as compared to prior period |
Revenue on a constant currency basis |
Revenue as reported |
Percent change on a constant currency basis |
|
Revenue by product category | |||||
Upper extremity joints and trauma | $ 48,199 | $ (238) | $ 47,961 | $ 45,808 | 4.7% |
Lower extremity joints and trauma | 16,233 | 3 | 16,236 | 14,776 | 9.9% |
Sports medicine and biologics | 3,701 | (34) | 3,667 | 4,163 | -11.9% |
Total extremities | 68,133 | (269) | 67,864 | 64,747 | 4.8% |
Large joints and other | 15,259 | (614) | 14,645 | 14,286 | 2.5% |
Total | $ 83,392 | $ (883) | $ 82,509 | $ 79,033 | 4.4% |
Revenue by geography | |||||
United States | $ 47,861 | $ -- | $ 47,861 | $ 46,103 | 3.8% |
International | 35,531 | (883) | 34,648 | 32,930 | 5.2% |
Total | $ 83,392 | $ (883) | $ 82,509 | $ 79,033 | 4.4% |
Year ended | |||||
(unaudited) | |||||
December 29, 2013 | December 30, 2012 | ||||
Revenue as reported |
Foreign exchange impact as compared to prior period |
Revenue on a constant currency basis |
Revenue as reported |
Percent change on a constant currency basis |
|
Revenue by product category | |||||
Upper extremity joints and trauma | $ 184,457 | $ (525) | $ 183,932 | $ 175,242 | 5.0% |
Lower extremity joints and trauma | 58,747 | (18) | 58,729 | 34,109 | 72.2% |
Sports medicine and biologics | 14,752 | (72) | 14,680 | 15,526 | -5.4% |
Total extremities | 257,956 | (615) | 257,341 | 224,877 | 14.4% |
Large joints and other | 53,003 | (1,513) | 51,490 | 52,643 | -2.2% |
Total | $ 310,959 | $ (2,128) | $ 308,831 | $ 277,520 | 11.3% |
Revenue by geography | |||||
United States | $ 182,104 | $ -- | $ 182,104 | $ 156,750 | 16.2% |
International | 128,855 | (2,128) | 126,727 | 120,770 | 4.9% |
Total | $ 310,959 | $ (2,128) | $ 308,831 | $ 277,520 | 11.3% |
Tornier N.V. | |||||||||
Reconciliation of Revenue to Non-GAAP Pro Forma Revenue | |||||||||
(in thousands) | |||||||||
Three months ended | |||||||||
(unaudited) | |||||||||
December 29, 2013 | December 30, 2012 | ||||||||
Revenue as reported |
Foreign exchange impact as compared to prior period |
Revenue on a constant currency basis |
* Pro forma adjustment for acquisitions |
Pro forma revenue on a constant currency basis |
Revenue as reported |
* Pro forma adjustment for acquisitions |
Pro forma revenue on a constant currency basis | Percent change on a constant currency basis | |
Revenue by product category | |||||||||
Upper extremity joints and trauma | $ 48,199 | $ (238) | $ 47,961 | $ -- | $ 47,961 | $ 45,808 | $ 11 | $ 45,819 | 4.7% |
Lower extremity joints and trauma | 16,233 | 3 | 16,236 | -- | 16,236 | 14,776 | 282 | 15,058 | 7.8% |
Sports medicine and biologics | 3,701 | (34) | 3,667 | -- | 3,667 | 4,163 | -- | 4,163 | -11.9% |
Total extremities | 68,133 | (269) | 67,864 | -- | 67,864 | 64,747 | 293 | 65,040 | 4.3% |
Large joints and other | 15,259 | (614) | 14,645 | -- | 14,645 | 14,286 | -- | 14,286 | 2.5% |
Total | $ 83,392 | $ (883) | $ 82,509 | $ -- | $ 82,509 | $ 79,033 | $ 293 | $ 79,326 | 4.0% |
Revenue by geography | |||||||||
United States | $ 47,861 | $ -- | $ 47,861 | $ -- | $ 47,861 | $ 46,103 | $ 293 | $ 46,396 | 3.2% |
International | 35,531 | (883) | 34,648 | -- | 34,648 | 32,930 | -- | 32,930 | 5.2% |
Total | $ 83,392 | $ (883) | $ 82,509 | $ -- | $ 82,509 | $ 79,033 | $ 293 | $ 79,326 | 4.0% |
Year ended | |||||||||
(unaudited) | |||||||||
December 29, 2013 | December 30, 2012 | ||||||||
Revenue as reported |
Foreign exchange impact as compared to prior period |
Revenue on a constant currency basis |
* Pro forma adjustment for acquisitions |
Pro forma revenue on a constant currency basis |
Revenue as reported |
* Pro forma adjustment for acquisitions |
Pro forma revenue on a constant currency basis | Percent change on a constant currency basis | |
Revenue by product category | |||||||||
Upper extremity joints and trauma | $ 184,457 | $ (525) | $ 183,932 | $ -- | $ 183,932 | $ 175,242 | $ 807 | $ 176,049 | 4.5% |
Lower extremity joints and trauma | 58,747 | (18) | 58,729 | -- | 58,729 | 34,109 | 20,017 | 54,126 | 8.5% |
Sports medicine and biologics | 14,752 | (72) | 14,680 | -- | 14,680 | 15,526 | -- | 15,526 | -5.4% |
Total extremities | 257,956 | (615) | 257,341 | -- | 257,341 | 224,877 | 20,824 | 245,701 | 4.7% |
Large joints and other | 53,003 | (1,513) | 51,490 | -- | 51,490 | 52,643 | -- | 52,643 | -2.2% |
Total | $ 310,959 | $ (2,128) | $ 308,831 | $ -- | $ 308,831 | $ 277,520 | $ 20,824 | $ 298,344 | 3.5% |
Revenue by geography | |||||||||
United States | $ 182,104 | $ -- | $ 182,104 | $ -- | $ 182,104 | $ 156,750 | $ 20,824 | $ 177,574 | 2.6% |
International | 128,855 | (2,128) | 126,727 | -- | 126,727 | 120,770 | -- | 120,770 | 4.9% |
Total | $ 310,959 | $ (2,128) | $ 308,831 | $ -- | $ 308,831 | $ 277,520 | $ 20,824 | $ 298,344 | 3.5% |
Notes: | |||||||||
* -- Represents Pro forma Revenue adjustment for OrthoHelix acquisition related to the respective period. |
Tornier N.V. | ||||
Reconciliation of Net Loss to | ||||
Non-GAAP Adjusted Earnings Before Interest, Taxes, Depreciation | ||||
and Amortization (EBITDA) | ||||
(in thousands) | ||||
Three months ended | Year ended | |||
(unaudited) | (unaudited) | |||
December 29, 2013 |
December 30, 2012 |
December 29, 2013 |
December 30, 2012 |
|
Revenue, as reported | $ 83,392 | $ 79,033 | $ 310,959 | $ 277,520 |
Net loss, as reported | $ (10,699) | $ (4,803) | $ (36,426) | $ (21,744) |
Interest income | (64) | (34) | (245) | (338) |
Interest expense | 1,502 | 2,303 | 7,256 | 3,733 |
Income tax expense (benefit) | 944 | (12,240) | 2,349 | (10,935) |
Depreciation | 5,475 | 5,126 | 20,681 | 18,511 |
Amortization | 4,288 | 3,708 | 15,885 | 11,721 |
Subtotal Non-GAAP EBITDA | 1,446 | (5,940) | 9,500 | 948 |
Other non-operating expense (income) | 228 | (62) | 45 | (116) |
Foreign currency transaction loss | 749 | 278 | 1,820 | 473 |
Loss on extinguishment of debt | -- | 593 | 1,127 | 593 |
Share-based compensation | 3,547 | 1,722 | 8,300 | 6,830 |
Inventory product rationalization due to acquisition | -- | 2,961 | -- | 2,961 |
Inventory step-up from acquisition | 464 | 1,578 | 5,908 | 1,993 |
Special charges: | ||||
Acquisition, integration and distribution transition costs | 2,401 | 3,122 | 7,143 | 4,920 |
Restructuring charges | 521 | 1,111 | 521 | 6,357 |
Reversal of OrthoHelix contingent consideration liability | (193) | -- | (5,140) | -- |
Impairment of intangibles | -- | 4,737 | -- | 4,737 |
Italy bad debt expense | -- | -- | -- | 1,995 |
Legal settlements | -- | -- | 1,214 | -- |
Management exit costs | -- | 861 | -- | 1,235 |
Non-GAAP adjusted EBITDA | $ 9,163 | $ 10,961 | $ 30,438 | $ 32,926 |
Non-GAAP adjusted EBITDA margin | 11.0% | 13.9% | 9.8% | 11.9% |
Tornier N.V. | ||||
Reconciliation of Net Loss and Net Loss per Share | ||||
to Non-GAAP Adjusted Net Loss and Non-GAAP Adjusted Net Loss per Share | ||||
(in thousands) | ||||
Three months ended | Year ended | |||
(unaudited) | (unaudited) | |||
December 29, 2013 |
December 30, 2012 |
December 29, 2013 |
December 30, 2012 |
|
Net loss, as reported | $ (10,699) | $ (4,803) | $ (36,426) | $ (21,744) |
Inventory step-up from acquisition, net of tax | 369 | 1,534 | 5,540 | 1,869 |
Tax benefit due to reversal of valuation allowance from acquisition | (580) | (10,700) | (1,120) | (10,700) |
Loss on extinguishment of debt, net of tax | -- | 479 | 1,127 | 479 |
Inventory product rationalization due to acquisition, net of tax | -- | 2,916 | -- | 2,916 |
Special charges, net of tax: | ||||
Acquisition, integration and distribution transition costs | 2,363 | 3,118 | 7,048 | 4,908 |
Restructuring charges | 521 | 1,119 | 521 | 6,097 |
Reversal of OrthoHelix contingent consideration liability | (193) | -- | (5,140) | -- |
Italy bad debt expense | -- | -- | -- | 1,995 |
Impairment of intangibles | -- | 4,737 | -- | 4,737 |
Legal settlements | -- | -- | 1,214 | -- |
Management exit costs | -- | 861 | -- | 1,235 |
Non-GAAP adjusted net loss | (8,219) | (739) | (27,236) | (8,208) |
Net loss per share, as reported | ||||
Basic and diluted | $ (0.22) | $ (0.12) | $ (0.79) | $ (0.54) |
Inventory step-up from acquisition, net of tax | 0.01 | 0.04 | 0.12 | 0.05 |
Tax benefit due to reversal of valuation allowance from acquisition | (0.01) | (0.26) | (0.02) | (0.27) |
Loss on extinguishment of debt | -- | 0.01 | 0.02 | 0.01 |
Inventory product rationalization due to acquisition, net of tax | -- | 0.07 | -- | 0.07 |
Special charges, net of tax: | ||||
Acquisition, integration and distribution transition costs | 0.05 | 0.08 | 0.15 | 0.13 |
Restructuring charges | 0.01 | 0.03 | 0.01 | 0.15 |
Reversal of OrthoHelix contingent consideration liability | (0.01) | -- | (0.11) | -- |
Italy bad debt expense | -- | -- | -- | 0.05 |
Impairment of intangibles | -- | 0.11 | -- | 0.12 |
Legal settlements | -- | -- | 0.03 | -- |
Management exit costs | -- | 0.02 | -- | 0.03 |
Non-GAAP adjusted net loss per share | ||||
Basic and diluted | $ (0.17) | $ (0.02) | $ (0.59) | $ (0.20) |
Weighted average ordinary shares outstanding | ||||
Basic and diluted | 48,478 | 41,639 | 45,826 | 40,064 |
Tornier N.V. | ||||||
Reconciliation of Net Cash Provided by Operating Activities | ||||||
to Non-GAAP Adjusted Free Cash Flow | ||||||
(in thousands) | ||||||
Three months ended | Year ended | |||||
(unaudited) | (unaudited) | |||||
December 29, 2013 | December 30, 2012 | December 29, 2013 | December 30, 2012 | |||
Net cash provided by operating activities, as reported | $ 6,661 | $ 3,295 | $ 24,982 | $ 14,431 | ||
Adjusted for: | ||||||
Cash paid related to facilities consolidation initiative | -- | 2,216 | -- | 4,811 | ||
Additions of instruments, as reported | (7,240) | (2,754) | (23,805) | (11,999) | ||
Purchases of property, plant and equipment, as reported | (3,307) | (3,405) | (10,825) | (11,291) | ||
Purchases of property, plant and equipment, related to facilities consolidation initiative | -- | 636 | -- | 2,997 | ||
Non-GAAP adjusted free cash flow | $ (3,886) | $ (12) | $ (9,648) | $ (1,051) |
Tornier N.V. | ||||
Reconciliation of Gross Margin and Gross Margin % | ||||
to Non-GAAP Adjusted Gross Margin and Gross Margin % | ||||
(in thousands) | ||||
Three months ended | Year ended | |||
(unaudited) | (unaudited) | |||
December 29, 2013 |
December 30, 2012 |
December 29, 2013 |
December 30, 2012 |
|
Revenue, as reported | $ 83,392 | $ 79,033 | $ 310,959 | $ 277,520 |
Gross margin, as reported | $ 62,125 | $ 52,059 | $ 224,787 | $ 195,602 |
Gross margin %, as reported | 74.5% | 65.9% | 72.3% | 70.5% |
Adjusted for: | ||||
Inventory product rationalization due to acquisition | -- | 2,961 | -- | 2,961 |
Inventory step-up due to acquisition | 464 | 1,578 | 5,908 | 1,993 |
Non-GAAP adjusted gross margin | 62,589 | 56,598 | 230,695 | 200,556 |
Non-GAAP adjusted gross margin % | 75.1% | 71.6% | 74.2% | 72.3% |
Tornier N.V. | ||||
Reconciliation of Operating Expenses and Operating Expenses as a % of Revenue to | ||||
Non-GAAP Adjusted Operating Expenses and Non-GAAP Adjusted Operating Expenses as a % of Revenue | ||||
Three Months Ended | Year ended | |||
(unaudited) | (unaudited) | |||
December 29, 2013 |
December 30, 2012 |
December 29, 2013 |
December 30, 2012 |
|
Revenue, as reported | $ 83,392 | $ 79,033 | $ 310,959 | $ 277,520 |
Operating expenses, as reported | 69,465 | 66,024 | 248,861 | 223,936 |
Operating expenses as a percentage of revenue, as reported | 83.3% | 83.5% | 80.0% | 80.7% |
Adjusted for: | ||||
Amortization of intangible assets | (4,288) | (3,708) | (15,885) | (11,721) |
Special charges | (2,729) | (9,831) | (3,738) | (19,244) |
Total adjustments | (7,017) | (13,539) | (19,623) | (30,965) |
Non-GAAP adjusted operating expenses | $ 62,448 | $ 52,485 | $ 229,238 | $ 192,971 |
Non-GAAP adjusted operating expenses as a percentage of revenue | 74.9% | 66.4% | 73.7% | 69.5% |
Tornier N.V. | ||||
Reconciliation of Projected 2013 Operating Loss | ||||
to Projected Non-GAAP Adjusted EBITDA | ||||
(in millions) | ||||
Three months ended | Year ended | |||
(unaudited) | (unaudited) | |||
March 30, 2014 | December 28, 2014 | |||
Low | High | Low | High | |
Revenue | $ 78.5 | $ 82.5 | $ 304.2 | $ 319.1 |
Operating Loss | $ (11.7) | $ (7.7) | $ (38.4) | $ (26.4) |
Adjusted for: | ||||
Inventory step-up due to acquisition | 0.3 | 0.2 | 0.7 | 0.5 |
Depreciation and amortization expense | 10.4 | 9.8 | 45.0 | 42.0 |
Share-based compensation | 2.2 | 1.8 | 9.6 | 7.5 |
Special charges | 2.8 | 1.9 | 5.6 | 3.9 |
Total adjustments | $ 15.7 | $ 13.7 | $ 60.9 | $ 53.9 |
Non-GAAP adjusted EBITDA | $ 4.0 | $ 6.0 | $ 22.5 | $ 27.5 |
Non-GAAP adjusted EBITDA margin | 5.1% | 7.3% | 7.4% | 8.6% |
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.